Buffett Brain · Research note
Score updated 21 Oct 2026 · analysis from 18 May 2026
ADM· Consumer Staples
Archer-Daniels-Midland
ADM is a 122-year-old agricultural commodity processor with 1.5% operating margins, a textbook capital-intensive grind Buffett would skip.
Buffett fit
Weak fit
Owner
21
Durability
47
Management
67
Price
53
Score updated 21 Oct 2026 · analysis from 18 May 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Consumer Staples stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
Owning ADM at 36x earnings means betting that today's trough margins normalize back toward the cycle average.
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ADM has survived since 1902 and will likely survive to 2036, the food system needs middlemen.
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Management is shrinking shares at 3.8% per year, which is genuinely shareholder-friendly.
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The owner-earnings yield of 10.8% looks attractive in isolation, but it sits against a 36x and a 34x EV/, those numbers do not reconcile without assuming the is heavily levered to commodity timing.
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- The full reasoning behind all four pillars
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 1Five-year rate of 3.8% per year shrinks the float meaningfully
- 2/Net Income of 3.9x signals strong cash conversion this period
- 3 of 0.47 is conservative for a capital-intensive processor
- 4Net income has been positive every year for five years
Concerns
6- 1 of just 5.8% confirms this is a price-taker business
- 2 of 1.5% leaves almost no buffer for commodity volatility
- 3Five-year EPS CAGR of -17.4% means earnings power has been shrinking
- 4Interest coverage of 2.15x is thin for a cyclical commodity processor
Price history
$80.46+21.5%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Archer-Daniels-Midland procures, transports, stores, processes and merchandises agricultural commodities across three segments: Ag Services and Oilseeds, Carbohydrate Solutions and Nutrition. The defining metric is a 5.8% , there is essentially zero because corn is corn. Scale and global logistics are the only real , and even that is being eroded by accounting investigations and a weakening Nutrition segment. Revenue actually contracted 1.5% per year over five years.
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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