Monsanto Company: Zacks Rank Buy

Monsanto Company (NYSE: MON - News) recently announced its expansion of a joint venture with China National Seed Group Corp. The joint venture provides corn seed to Chinese farmers. In early August, Monsanto declared a quarterly dividend of 24 cents per share, which is payable on October 24, 2008, to shareowners of record on October 3, 2008.

Company Description

Monsanto Company is a leading global provider of technology-based solutions and agricultural products that improve farm productivity and food quality.

Growth Through Expansion

The company just announced its expansion of a joint venture with China National Seed Group Corp. The joint venture provides corn seed to Chinese farmers.

Under the deal, China Seed, a subsidiary of Sinochem Corp., and Monsanto Far East Ltd., a Monsanto subsidiary, will increase their investment in CNSGC-Dekalb Seed Co. formed in 2001. The agreement will allow the joint venture to expand its existing corn seed business by combining its business operations with the corn seed business of China Seed and providing the joint venture with access to cord seed hybrids developed by Monsanto and China Seed.

'We are pleased to increase our collaboration with China Seed to deliver elite corn hybrids to farmers within the world's second-largest corn-growing region,' said Brett Begemann, executive vice president of Monsanto. 'This investment signals a new strategic emphasis for our business in China and a new growth opportunity for our international corn seed business. We are excited about the potential that our combined efforts can have in improving farm productivity, increasing farmer incomes and helping Chinese farmers to meet both China's and the world's growing demand for grain.'

Income

In early August, Monsanto declared a quarterly dividend of 24 cents per share, which is payable on October 24, 2008, to shareowners of record on October 3, 2008.

Fundamental Growth

The company posted record results in the fiscal third quarter. Earnings per share of $1.45 topped the previous year's $1.02 and surpassed the consensus by 7%.

Net sales were a record $3.6 million, 26% higher than the year-prior. Monsanto noted that sales were helped by higher revenues from the company's Roundup agricultural herbicides globally, increased soybean seed and traits revenues in the United States, bigger corn seed and trait revenues in the United States, higher corn seed revenues in Europe-Africa, and larger cotton seed and trait revenue in the United States.

MON hiked its guidance for the year ending August 2008, stating that now it expects full-year 2008 earnings per share of $3.40 on an ongoing basis.

Wall Street is calling for $3.46 right now, an advance from two months-ago forecasts of $3.40.

More Signs of Growth

Monsanto's return on equity (ROE) of 22% dwarfs the industry average of 4%. The company's net margin of 18% is also well above the industry average of 2.9%. MON's earnings per share are expected to grow by 19% over the next 3 - 5 years, versus the industry average of 15%.