Why is the Elders (ASX:ELD) share price jumping 11% to a decade-high?

Elders shares are on form on Monday following the release of a trading update…

| More on:
A woman leaps into the air with loads of energy, in a lush green field.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Elders shares have hit a decade-high on Monday.
  • This follows the release of a very positive trading update.
  • Management is guiding to earnings growth of 20% to 30% in FY 2022.

The Elders Ltd (ASX: ELD) share price has started the week with a bang.

In morning trade, the agribusiness company’s shares have jumped 11% to a decade-high of $13.34.

Why is the Elders share price surging higher?

Investors have been bidding the Elders share price higher today after responding positively to a trading update.

According to the release, Elders revealed that it expects its underlying earnings before interest tax (EBIT) to increase 20% to 30% in FY 2022. Management notes that this outlook exceeds the market expectations based on the mid-point of the earnings expectations of sell side analysts covering the company.

Elders’ Managing Director and CEO, Mark Allison, commented: “Elders’ performance so far in our financial year 2022 has been strong and exceeds our performance after the first five months of FY21. After finalisation of the February trading numbers, which continue improved earnings for the first quarter, we now believe we will exceed analysts’ consensus for the full year to 30 September 2022 and produce an Underlying EBIT result in the range – which is necessarily broad given we are only five months into our financial year.”

What is driving its strong form?

The release explains that Elders has experienced an improvement in its Retail and Wholesale segments compared with the same time last year. This is due to increased sales and favourable seasonal conditions in most parts of Australia.

And while management acknowledges that some of these sales are forward purchases by primary producers seeking to mitigate the risk of instability in supply chains, it still considers the majority of sales are a result of increased activity.

In addition, the company’s Agency business continues to perform strongly as a result of high prices in both sheep and cattle. This is being offset slightly by lower volumes due to restocking and the good availability of feed on farm. Real Estate is also exceeding expectations due to increased turnover and high demand.

All in all, FY 2022 looks set to be a very positive year for Elders.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on 52-Week Highs

Two people climb to the summit and raise their arms in success as the sun rises brightly over the mountains.
52-Week Highs

These ASX 200 shares just cracked new highs today

Let's check which ASX shares have had a particularly good day on the market.

Read more »

Team celebrating corporate success screaming with joy.
52-Week Highs

3 ASX All Ordinaries shares celebrating Friday with new 52-week highs

These three All Ords shares are flying high today...

Read more »

Three children wearing athletic short and singlets stand side by side on a running track wearing medals around their necks and standing with their hands on their hips.
52-Week Highs

3 ASX 200 shares smashing new 52-week highs on Thursday

It's a good day to own these ASX 200 favourites.

Read more »

Three businesspeople leap high with the CBD in the background.
52-Week Highs

3 ASX 200 shares rocking new, multi-year highs on Tuesday

These three ASX 200 shares hit new multi-year highs today...

Read more »

Rocket going up above mountains, symbolising a record high.
52-Week Highs

These 3 ASX All Ordinaries shares hit new 52-week highs on Monday

These three All Ords shares just hit new 52-week highs.

Read more »

three businessmen high five each other outside an office building with graphic images of graphs and metrics superimposed on the shot.
52-Week Highs

3 ASX All Ordinaries shares hitting new 52-week highs on Wednesday

All three stocks notched up one-year plus highs in intraday trading today without releasing new price sensitive announcements.

Read more »

two dogs, a golden one and a black one, together carry a stick in their mouths as the run side by side with contented, happy looks on their faces.
52-Week Highs

2 ASX 300 shares rocking new 52-week highs on Monday

These 2 ASX 300 shares have seen new 52-week highs today.

Read more »

A man jumps over a river, bouncing from one rock to another.
52-Week Highs

Rocks and lasers: 2 ASX All Ords shares securing new multi-year highs on Wednesday

One tech stock and a coal share have launched to long-forgotten heights today.

Read more »