Why fund managers are cautious on Elders despite better farm conditions
Improving rainfall and cattle prices have not been enough for Elders to consistently deliver on earnings, with IT project costs and a CEO transition adding uncertainty.
30 Jun 2026 · 5 min read
In short
Elders missed first-half FY26 market earnings expectations by around 7%, driven by higher costs from the final stages of IT project implementation.
Equity Trustees Asset Management points to an attractive 4.7% dividend yield and 13% free cash flow yield, alongside a diversified agribusiness model.
Medallion Financial rates the stock a sell, citing a new CEO transition and a track record of struggling to execute even during favourable agricultural conditions.
Agribusiness services provider Elders has struggled to convert an improving agricultural cycle into consistent earnings delivery, with Pendal Group's May 2026 Newsletter detailing a first-half FY26 result that missed market expectations by around 7%, driven by higher costs from the final stages of implementing various IT projects across the organisation, prompting brokers to cut forward earnings estimates by 10%.
Favourable conditions undermined by execution issues
Milford Asset Management's July 2025 Monthly Report had earlier detailed the mix of factors weighing on the stock even as conditions improved: cyclically low earnings, uncertainty around a potential acquisition, and the complexity of a major systems upgrade, an admittedly challenging combination that the manager believed the market was over-penalising given a 15.1% rally on better cattle pricing and wetter conditions in South Australia and Victoria. Wilson Asset Management's own July 2025 report viewed the pending ACCC decision on the Delta Agriculture acquisition as a key catalyst for a re-rating, with material upside available from synergies over time.
Elders is suffering from cyclically low earnings, uncertainty around a potential acquisition, and the complexities of a major systems upgrade—an admittedly challenging combination. That said, we believe the market was over-penalising these concerns.
— Milford Asset Management, Monthly Report, July 2025
Equity Trustees Asset Management's March 2026 Quarterly Report detailed the case for buying into the stock at that point: a diversified Australian agribusiness with a strong management team and balance sheet, offering an attractive 4.7% dividend yield and 13% free cash flow yield at what it considered a reasonable price, alongside several transformational investments expected to deliver improved returns and useful countercyclical diversification against the broader economy.
What managers are watching next
Medallion Financial's June 2026 Article struck a notably more skeptical tone, rating the stock a sell despite it not being widely loved, arguing that in a period that has broadly been productive for agricultural businesses and land, Elders has still struggled given the complexity of its many moving parts. The manager also flagged the recent standing down of the long-term CEO and arrival of a new one as a risk factor, since incoming leadership sometimes cleans house and resets expectations, meaning more negative news could emerge before the turnaround gains traction.
Questions
Why did Elders miss earnings expectations in its first half FY26 result?
Elders missed first-half FY26 market earnings expectations by around 7%, primarily due to higher costs from the final stages of implementing various IT projects across the organisation, which management expects to largely unwind in FY27.
Why do some fund managers still like Elders despite execution issues?
Equity Trustees Asset Management points to Elders' diversified agribusiness exposure, strong management team and balance sheet, an attractive 4.7% dividend yield, and a 13% free cash flow yield as reasons for holding the stock at a reasonable valuation.
Why is Medallion Financial bearish on Elders?
Medallion Financial rates Elders a sell, arguing the business has struggled to execute even during a broadly productive period for agricultural businesses, and flags risk that a recent CEO transition could bring further negative news before a turnaround takes hold.
11 managers, 12 comments, with each manager's latest recorded position.
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