Archer-Daniels-Midland Company (NYSE:ADM) has had a great year, with the stock surging almost 32%, compared with the S&P 500’s 15% return. Earnings have started to recover, and investors have noticed. The stock is up as well. That leaves investors with a fairly simple question: after the recovery, is ADM still reasonably valued?
ADM’s Biggest Advantage Is Its Scale
Archer-Daniels-Midland Company does not have the kind of moat that comes from owning brands people see on grocery store shelves. Its advantage is much less visible. The company has built a huge network spanning agricultural origination, transportation, processing, biofuels, food ingredients, and nutrition. That gives ADM the ability to move commodities through different parts of the supply chain and make money from several stages of the process.
The benefit of that scale showed up in the latest results. In Q2 2026, operating profit from Ag Services & Oilseeds jumped 129% from a year earlier. Carbohydrate Solutions and Nutrition were up 22% and 51%, respectively. ADM also pointed to its global asset network as an advantage in dealing with a complicated agricultural market. There is a catch, though. This is still a cyclical business. ADM’s margins can move around quite a bit depending on crop prices, energy costs, trade policies, and biofuel markets. So while the company’s scale gives it an edge, it does not make the business immune to industry cycles.
Trailing vs. Forward P/E
Archer-Daniels-Midland Company looks expensive if you only look at its trailing P/E. At around $80.45 a share, the stock trades at roughly 22 times trailing earnings, based on diluted EPS of about $3.66. However, that number doesn’t tell the whole story. ADM expects earnings to improve significantly in 2026. The company raised its adjusted EPS guidance to $5.15-$5.60, up from $4.15-$4.70 previously. Using the midpoint of the new guidance, ADM is trading at roughly 15 times 2026 adjusted earnings.
That is a pretty big difference. Investors are not necessarily paying 22 times earnings because they think ADM’s current earnings are worth that much. They are looking past the weaker trailing results and betting that the recovery continues. At about 15 times expected earnings, the valuation looks much more reasonable.
But ADM Isn’t as Cheap as It Used to Be
The problem is that ADM’s current forward P/E is already toward the higher end of its recent range. ADM’s forward P/E was around 15.0x in 2025, 10.9x in 2024, 11.0x in 2023, 14.1x in 2022, and 14.5x in 2021. At roughly 15x today, investors are paying more than they did in several of those years. That doesn’t automatically make ADM expensive. However, it does tell us something important: the market has already priced in a decent part of the earnings recovery. If earnings keep improving, the valuation could prove reasonable. If the recovery loses steam, the stock has less of a cushion.
Moreover, ADM isn’t the cheapest stock in its peer group. ADM’s valuation looks fairly reasonable next to some competitors, but there are cheaper options. Recent estimates put ADM’s forward P/E in the mid-teens. Ingredion and Bunge, for example, trade closer to 11x-12x forward earnings, while Darling Ingredients is around 13x-17x depending on the estimates being used. ADM can command a premium. Its scale is difficult to replicate, and its operations are spread across several parts of the agricultural and food supply chain. Its long dividend history also makes it attractive to a different group of investors. Still, a 15x multiple isn’t a screaming bargain when some similar businesses are available at lower prices.
The Dividend Helps
The dividend is another reason investors may be willing to stick with ADM. The company recently increased its quarterly dividend to $0.52 per share. That marked its 53rd consecutive year of dividend growth, while ADM has paid an uninterrupted dividend for more than 94 years. At $80.45 a share, that works out to an annual dividend of $2.08 and a yield of about 2.6%. A 2.6% yield won’t turn many heads on its own. The appeal is really in the combination of the yield, the long history of increases, and the potential for earnings to recover. ADM has a long dividend-growth record, but it may not be the only rising dividend stock worth a closer look. See which other names stand out in 11 Best Rising Dividend Stocks to Buy Right Now.
Of course, the company still has to balance the dividend with the money it needs to invest back into the business. The earnings recovery is what matters for now. For ADM, the next leg of the story comes down to earnings. The company’s 2026 outlook is tied to several moving pieces, including biofuel economics, renewable fuel obligations, energy prices, and margins in crushing and ethanol. Management also expects the Nutrition business to keep improving.
If those trends continue, ADM could earn more than investors currently expect. If that happens, today’s 15x forward P/E would look a lot less demanding. However, things can go the other way. A weaker agricultural market, lower processing margins, poor ethanol economics, or unfavorable trade policies could put pressure on earnings. If estimates come down, that 15x forward P/E would suddenly look less attractive.
Earnings Don’t Tell the Whole Story
ADM’s cash flow is worth watching too. The company generated $1.30 billion in operating cash flow during the first half of 2026 and spent $466 million on capital expenditures. That leaves about $833 million after capital spending, before dividends and other financing needs.
Cash generation has improved as earnings have recovered, but ADM is not a light-asset business. It expects to spend between $1.3 billion and $1.5 billion on capital expenditures for all of 2026. So investors shouldn’t look at a 15x earnings multiple in isolation. ADM still needs to put a meaningful amount of money back into its operations. ADM isn’t the only company where cash generation deserves attention. Investors looking for other cash-rich businesses can explore 12 Stocks From Companies Generating High Cash Flow.
Is ADM Stock Still Attractive?
ADM is in a better position than it was when earnings were under pressure, but the stock isn’t an obvious bargain anymore. At roughly 15 times forward earnings, the valuation looks defensible if the earnings recovery plays out as expected. The company’s scale, diversified operations, and long dividend history also give investors some reasons to pay a premium.
The issue is that the market already seems to believe the recovery is happening. ADM’s current forward P/E is above several levels seen over the past few years. So at this price, the investment case depends less on a cheap valuation and more on whether ADM can keep growing earnings from here. If it does, the current multiple could prove reasonable. If earnings disappoint, investors may find that they paid up for the recovery a little too early.
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This article is originally published at Insider Monkey.
