Graincorp Ltd (ASX: GNC) shares are in focus this week after the stock plummeted 14% on Monday.
It was a tumultuous start to the earnings season yesterday as the S&P/ASX 200 Index (ASX: XJO) lost more than 1%.
Graincorp was heavily sold off after the company issued low FY26 earnings guidance.
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What did the company report?
Overall, the company released its FY26 earnings guidance, forecasting underlying EBITDA of $200–240 million and underlying NPAT between $20–50 million.
These were both below the FY25 result.
Additionally, the company reported:
- Export volumes expected: 5.5–6.5 million tonnes (FY25: 7.0mmt)
- Receival volumes anticipated: 11.0–12.0 million tonnes (FY25: 13.3mmt)
- Nutrition and Energy average crush margins steady with FY25
- Agri energy contribution expected to be lower due to US biofuels uncertainty
Investors react strongly
In yesterday's report, management said that FY26 earnings will be under pressure due to lower margins across the business.
This reflects ongoing oversupply in global grain markets and continued pressure on export spreads.
These headwinds identified by the company led Graincorp shares to fall more than 14% yesterday.
In the last 12 months, Graincorp shares are down almost 17%.
Bell Potter's view on Graincorp shares
Following yesterday's trade, the team at Bell Potter provided updated analysis on Graincorp shares.
The broker downgraded its near-term outlook.
Following the update we have downgraded FY26e NPAT by -58% in FY26e, -10% in FY27e and -4% in FY28e. Changes in outward years reflect lower carryout assumptions, with lower trading margins the main driver of changes in FY26e.
The broker said Graincorp does particularly well when east coast grain crops are large, global grain crops are small and EU/Canada oilseed planting are soft.
For the last two seasons only one of these dynamics has been at play.
Bell Potter also cautioned the latest update for GNC, probably highlights how dependent GNC returns are to global grain fundamentals.
With improved cropping conditions in the EU and North America and record crops in Brazil, Bell Potter said it is unlikely that the headwinds being seen are likely to ease over FY26e.
Price target adjustment
Based on this guidance, Bell Potter has reduced its price target on Graincorp shares to A$6.80 (prev. A$7.60).
Graincorp shares closed yesterday at $6.19 per share after the big sell-off.
Based on this analysis, it indicates that Graincorp shares are trading roughly 9.85% below fair value.
The broker maintained its hold recommendation.
