Finvest
ADM Agribusiness · Agriculture · Commodities · Dividend payer · Thesis updated June 12, 2026

ADM’s rebound rests on ethanol and nutrition

01 Running thesis

A recovery, with one weak center

The ADM story improved after Q1 2026. Management raised full-year adjusted EPS guidance, meaning profit per share after some special items, to $4.15 to $4.70. That was up from $3.60 to $4.25. The raise matters because the company did it while its largest segment was still under pressure.

The bull case is simple. Carbohydrate Solutions and Nutrition are now doing enough to carry the company while crushing is weak. Carbohydrate Solutions operating profit rose 48% in Q1, helped by strong ethanol margins. Nutrition operating profit rose 42%, with both Human Nutrition and Animal Nutrition improving.

The bear case is not gone. Ag Services and Oilseeds operating profit fell 34% in Q1. Crushing posted a $79 million operating loss, and the segment had about $275 million of negative mark-to-market and timing effects. Mark-to-market means paper gains or losses from changing market prices before related contracts settle. If crushing stays weak, or if ethanol margins cool off, the new guidance could become harder to hit.

May 2026▲ADM raised full-year adjusted EPS guidance to $4.15 to $4.70 from $3.60 to $4.25. Stronger Carbohydrate Solutions and Nutrition results made the recovery case more credible.
Feb 2026▼The 2025 10-K confirmed a sharp decline in the core Ag Services and Oilseeds segment. Crushing profit fell hard for the year, keeping the bear case alive.
Feb 2026→Q4 2025 results met lowered expectations, and initial 2026 adjusted EPS guidance pointed to a slow recovery. The view stayed cautious until proof of better margins arrived.
Nov 2025▼Management lowered 2025 guidance to $3.25 to $3.50 and delayed expected biofuel policy benefits. The crushing downturn looked deeper and longer than hoped.
Aug 2025→ADM remediated its prior internal-control material weakness, which reduced a governance concern. At the same time, crushing margin pressure continued, so the fundamental view did not improve.
02 Business model

From harvests to fuels and flavors

ADM is a crop middleman and processor at global scale. It buys corn, oilseeds, wheat, and other crops. It stores them, ships them, trades them, and turns them into products used in food, animal feed, fuel, and industrial markets.

The company makes money on spreads. A spread is the difference between what ADM pays for a crop and what it earns from selling the crop or the products made from it. That sounds simple, but the spreads move with weather, crop supply, energy prices, trade rules, and biofuel policy.

The model can be powerful when plants run well and margins are wide. It can also swing fast. In Q1 2026, ADM’s total revenue was $20.490 billion, but the key issue was not sales size. It was profit mix: the smaller Carbohydrate Solutions and Nutrition segments made more operating profit than Ag Services and Oilseeds.

03 Product portfolio

Crops, calories, fuel, and ingredients

Cash cow

Ag services and grain handling

ADM buys, stores, transports, and sells crops around the world. This is the biggest revenue base, but results can swing with freight, trade flows, and crop prices.

Cash cow

Oilseed crushing

ADM crushes soybeans, canola, cottonseed, and other oilseeds into vegetable oils and protein meals. This is the current problem area, with Q1 2026 crushing operating profit at a $79 million loss.

Steady

Starches and sweeteners

Corn and wheat are processed into sweeteners, starches, syrups, glucose, wheat flour, and dextrose. Demand can be steadier than commodity trading, but margins still respond to input costs and customer demand.

Growth engine

Ethanol and biofuels

ADM produces ethanol used in gasoline blending. In Q1 2026, stronger ethanol margins were the main driver of the Vantage Corn Processors profit jump.

Growth engine

Human nutrition ingredients

ADM sells flavors, colors, plant proteins, emulsifiers, fibers, probiotics, enzymes, and botanical extracts. This business is meant to move ADM toward more specialized, higher-value ingredients.

Option

Animal nutrition and feed

ADM sells feed, premix, additives, animal health products, pet food, and pet treats. The new Akralos joint venture with Alltech is part of the push toward higher-margin specialty ingredients.

04 Business segments

Revenue is big, profit is shifting

Ag Services and Oilseeds78%declining
Carbohydrate Solutions12%growing fast
Nutrition9%growing fast
Other Business1%declining

Segment shares use Q1 2026 revenue from external customers, with Other Business included. Ag Services and Oilseeds is the largest revenue source, but Carbohydrate Solutions led segment operating profit in Q1 2026.

05 Risk factors

What could break the rebound

Crushing stays in a slump

High impact · Medium odds

Ag Services and Oilseeds is ADM’s largest segment by revenue, and it remains weak. Q1 2026 segment operating profit fell 34%, and Crushing had a $79 million operating loss. If soybean and canola crush margins stay low, gains in other segments may not be enough.

We watchQ2 and Q3 Crushing operating profit, soy and canola crush margins, and any reversal of the Q1 mark-to-market timing effects.

Ethanol margins fade

High impact · Medium odds

Carbohydrate Solutions was the main upside surprise in Q1 2026. Vantage Corn Processors operating profit increased by $94 million, helped by stronger ethanol margins. If ethanol prices weaken or policy support disappoints, the raised EPS guide loses a key pillar.

We watchEthanol margins, Renewable Volume Obligation updates, and final rules for Section 45Z clean fuel credits.

SEC and DOJ investigations worsen

High impact · Medium odds

ADM is still under SEC and DOJ investigation related to intersegment sales. The company says it cannot predict the outcome. The former internal-control material weakness has been remediated, which lowers one governance risk, but fines, litigation, or reputation damage remain possible.

We watchCompany filings for SEC or DOJ updates, legal reserves, settlement language, or new shareholder claims.

Working capital gets expensive

Medium impact · Medium odds

ADM needs large amounts of cash to buy and move commodities. In Q1 2026, inventories were a $1.4 billion operating cash outflow, while derivatives and brokerage balances also moved sharply. The company had $9.0 billion of total available liquidity at March 31, 2026, but commodity spikes can use cash quickly.

We watchTotal available liquidity, inventory balances, commercial paper outstanding, and operating cash flow.

Nutrition growth slows

Medium impact · Medium odds

Nutrition is a key part of the bull case because it can be less tied to raw commodity swings. Q1 2026 operating profit rose 42%, helped by Flavors, Decatur East recovery, portfolio actions, and cost work. If demand for flavors, supplements, pet food, or feed additives weakens, ADM’s profit mix becomes more exposed to commodities again.

We watchHuman Nutrition and Animal Nutrition operating profit, Flavors sales commentary, and progress on the Akralos joint venture.
06 Quick answers

In one breath

What does ADM actually do?

ADM buys, moves, stores, and processes crops like corn, soybeans, oilseeds, and wheat. It turns them into food ingredients, animal feed, vegetable oils, ethanol, and specialty nutrition products.

Why did ADM’s outlook improve in 2026?

Management raised 2026 adjusted EPS guidance after Q1 results. The main reason was stronger profit in Carbohydrate Solutions and Nutrition, which more than offset weakness in Ag Services and Oilseeds.

What is the biggest risk for ADM stock?

The biggest business risk is that crushing margins stay weak while ethanol margins fade. The biggest governance risk is the ongoing SEC and DOJ investigations tied to intersegment sales.