3 Steps To Handling A Failing Trade

Archer Daniels Midland Stock disappointed investors with a large earnings miss that dropped the stock 2%. Since late January Archer Daniels Midland Stock has been in a recovery trend and on Monday May 2 it closed at $40.26.

Earnings announced this morning before the market opened were far shy of analysts estimates.

Archer Daniels Midland Earnings

Analysts had lowered their estimates for AM Stock to 57 cents a share after twice reducing their outlook. The company reported net earnings of just 39 cents per share before being adjusted to 42 cents. Revenue which was projected to be $16.7 billion, a drop from last year’s $17.5 billion, came in 18% lower at just $14.3 billion.

A variety of reasons for the sharp decline were given including lower than expected export volume and a loss taken by their trading desk. Archer Daniels Midland makes their income by buying, selling, transporting, storing and processing grains and oilseeds around the globe. They were “betting” on the wrong side of crop prices which resulted in losses being taken.

Income fell to just $230 million.

Archer Daniels Midland Stock 12 Month Chart

The 12 month chart below shows the recent recovery to the $40 valuation range. The 52 week low was back in late January when the stock fell to $29.86.

The Accumulation-Distribution Indicator shows the stock was under distribution since November of last year. Only in the last couple of weeks was the stock being accumulated. That should end now.

The Rate Of Change shows the stock as being overbought and today’s interim reading of 6.49 shows prices are falling but the stock is still overbought.

The last indicator, momentum, should that starting last week, Archer Daniels Midland Stock was losing momentum. I am expecting the stock to continue to decline.

Archer Daniels Midland Stock Chart – 12 Month

Archer Daniels Midland Stock – Dividend Outlook

The dividend is secure in my opinion and I wouldn’t see how this latest drop in revenue can affect the dividend of $1.12 annually. Overall revenue is down 12.9% over a year ago but the dividend payout ratio at 37% is low. Archer Daniels Midland should be able to continue the dividend without difficulty.

Archer Daniels Midland Stock Strategy

The dividend will be supportive of the stock price. The chance of ADM Stock falling back to the January lows is slim in my opinion unless the entire market should become “unglued”.

I am holding positions in Archer Daniels Midland Stock which were setup prior to earnings being released yesterday. The trade is sitting with a small loss. While taking losses is a part of investing I prefer to not take losses if they can be quickly rectified. The rest of this strategy article looks 3 steps that I have taken to handle turning my loss into a profit in ADM Stock.

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Archer Daniels Midland Stock Internal Links

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Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.