by Jared Levy on June 28, 2010
Monsanto (NYSE:MON) is always one of my favorite stocks to watch, and I enjoy listening to their earnings conference call even more. Earnings are expected to be announced on June 30. With 15 analysts covering MON, the consensus per-share estimate is $0.80, and the high and low estimates are $0.85 and $0.75, respectively.
Monsanto is a world leader in specialized seed production and was the creator of the glyphosate based herbicide Roundup. This product used to be a rose but appears to have become a thorn in MON’s side, losing market share to cheaper Chinese versions since its patent protection expired. The good news is that the Supreme Court recently lifted a ban on Monsanto’s Genetically Modified Roundup-Resistant Alfalfa seed. The company also announced a three-year, $1 billion share buyback effective July 1, 2010. MON also declared a quarterly dividend of 26.5 cents per share on its common stock. The dividend is payable on July 30, 2010, to shareowners of record on July 9, 2010.
On June 9, MON said they are “working on a revitalized product strategy to bring more choices to farmer customers, offering them the premium opportunity the company’s products create.” With this, they projected mid-teens earnings growth beyond this fiscal year. I’m curious to hear more details on their strategy.
While all of these developments appear promising, the stock has not had such a positive reaction. Since making these announcements, the stock has slipped another 3% lower, down to its current level of about $47.75. Observed 30-day volatility has been on the rise; after hitting a low of 17.7% in mid-April, vol surged to a recent high of 40% and has dropped off a bit in the past week or so to 38% in the at-the-money front month options. Implied volatility ahead of the report has been on the rise, but has not exceeded the historical level…