Zacks_Analysts' Blog : Archer Acquires Cattleman's Choice - Analyst Blog

Archer Daniels Midland Company’s (ADM) wholly owned subsidiary ADM Alliance Nutrition indicated that it has entered into an agreement to acquire Cattleman’s Choice Loomix, which is a leading producer of liquid animal feed supplements. The acquisition will allow the company to penetrate into the Western United States market while providing an opportunity to explore the liquid feed business.

Headquartered in Johnstown, Colo, Cattleman’s Choice Loomix manufactures the Loomix brand liquid feed supplement for ruminants. Moreover, it also entered into an agreement with a toll manufacturer in Fremont, Neb.

Recently, Archer Daniels reported robust third-quarter 2011 results. Net income for the reported quarter came in at $578.0 million or 86 cents per share compared with $421.0 million or 65 cents per share in the year-ago quarter. Quarterly earnings also outpaced the Zacks Consensus Estimate by a penny.

Archer Daniels is in the midst of a brisk expansion strategy, which includes increasing its crushing capacities in North America, and fertilizer blending and biodiesel capacities in South America. Moreover, in Europe, the company has acquired processing facilities in Czech Republic and Germany. These initiatives offer a strong upside potential to the company.

In addition, Archer Daniels is one of the leading players in the global food processing industry and commands a massive network of more than 560 processing and sourcing facilities and 27,000 vehicles operating across the Americas, Europe and Asia for transportation of agricultural commodities. This provides a strong competitive advantage to the company and strengthens its well-established position in the market.

Archer Daniels, which competes with Bunge Limited (BG) and Corn Products International Inc. (CPO), currently has a Zacks #3 Rank, implying a short-term Hold rating on the stock. Besides, the company retains a long-term Neutral recommendation.