Headquartered in St. Louis, Missouri, Monsanto (MON) is a leading global provider of agricultural products. It has two operating segments– Seeds and Genomics, and Agricultural Productivity.

The Seeds and Genomics segment produces corn, soybeans, canola and cotton seeds, as well as vegetable and fruit seeds. This segment also develops biotechnology traits to control insects and weeds.

The Agricultural Productivity segment consists of other glyphosate-based herbicides for agricultural, industrial, ornamental and turf applications and lawn-and-garden herbicides.

Disappointing Results and Guidance

The company reported a loss of 0.19 cents per share for its fiscal fourth quarter ended August 31, much worse than the Zacks Consensus Estimate of a loss of 1 cent per share.

However, the result compared favorably with the year-ago tally of 27 cents per share loss.

Revenues for the quarter were $2,355 million, down 10.5% year over year and below the Zacks Consensus Estimate of $2,889 million. Looking at segments, revenues from Seeds and Genomics decreased 9.1% year over year to $1,251 million while revenues from Agricultural Productivity declined 12% year over year to $1,104 million.

The company expects several global and industry headwinds to impact its results for fiscal 2016,. They now expect earnings in the range of $5.10-$5.60 per share, down from $5.73 earned in fiscal 2015.

They recently announced a buyback plan totaling $3 billion.

Falling Estimates

After dismal results, analysts have slashed their estimates for the company. Zacks Consensus Estimates for the current and the next fiscal year are $5.50 per share and $6.42 per share respectively, down from $6.45 and $7.31, 30 days ago. Declining estimates sent the stock to a Zacks Rank #5 (Strong Sell).

The Bottom-Line

Agricultural product companies have suffered from weak global economy and decline in commodity prices. A stronger dollar has added to their pains.

Per USDA, US farm income is expected to decline 36% this year to its lowest level in nine years. Record corn and soybean crops in the past few years have led to sagging prices and the trend is expected to continue in the coming months.

Apart from Zacks Stock Rank of “Strong Sell”, Zacks Industry Rank of 248 out of 265 (bottom 6%) and Style Score Ranks of “D” for Value and “F” for Momentum indicate more pain ahead.

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