Archer Daniels Expands Presence In Illinois With Flour Mill

As a part of its efforts to meet the increasing demand for flour and enhance presence in Illinois, Archer Daniels Midland Co. (NYSE:ADM) revealed that it is on track with the construction of a new flour mill in Mendota, IL.

This new facility will house all modern amenities with a daily milling capacity of 30,000 cwts, and the capability to grind soft and hard wheat varieties to meet a wide variety of customer needs. The company expects it to be functional in mid-2019. This facility will replace the company’s wheat mill in Chicago, which will discontinue operations when the Mendota facility is fully operational.

Apart from meeting the demand growth for flour in the Midwest, the facility will drive efficiencies on the back of the utilization of new technology and equipment as well as leveraging capabilities of Archer Daniels’ existing grain facility in Mendota.

As for the company’s Illinois footprint, Archer Daniels has initiated projects worth over $250 million in the last two years in the state. These include the aforementioned Mendota facility, new Animal Nutrition production facilities in Effingham and Quincy, and a partnership with DuPont (NYSE:DD) Industrial Biosciences to produce furan dicarboxylic methyl ester (FDME) from fructose.

Coming back to the new facility in Mendota, it forms a part of ADM milling, which is one of the largest flour millers worldwide. It operates several wheat flour mills in the U.S., Canada, Caribbean, Central America and United Kingdom.

Further, the construction of the new flour mill is in sync with the company’s strategy of enhancing presence in regions with growing demand in order to boost shareholder value. The company currently carries a Zacks Rank #4 (Sell) on account of recently released first-quarter 2017 results, wherein both earnings and sales lagged estimates. While this marked Archer Daniels’ second straight earnings miss, it has been missing sales estimates for over three years now.

The dismal sales surprise history has also led the company’s shares to underperform the broader sector year to date. The company has declined 7.5%, against the Zacks categorized Consumer Staples sector’s increase of 12%.

Stocks to Consider

Better-ranked stocks include Compania Cervecerias Unidas, S.A. (NYSE:CCU) and Coca Cola Femsa S.A.B. De C.V. (NYSE:KOF) , both sporting a Zacks Rank #1 (Strong Buy), and Adecoagro S.A. (NYSE:AGRO) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Compania Cervecerias has jumped nearly 26% year to date. Also, the company’s estimates for the current fiscal have witnessed uptrend in the last 30 days.

Coca Cola Femsa with a long-term earnings growth rate of 17% has gained 28.5% year to date.

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