Is Corteva (CTVA) an Undervalued Stock to Invest in According to Goldman Sachs?
March 23, 2025
We recently compiled a list of the 10 Undervalued Stocks to Invest in According to Goldman Sachs. In this article, we are going to take a look at where Corteva, Inc. (NYSE:CTVA) stands against the other undervalued stocks favored by Goldman Sachs.
Sell-side analysts identify undervalued stocks by conducting thorough fundamental analysis and examining financial metrics like revenue, earnings, debt levels, and growth potential. They use valuation techniques such as complex DCF models or P/E ratios to compare a company’s performance against industry peers to spot discrepancies between stock price and intrinsic value. Goldman Sachs, known for its reputation and expertise, leverages advanced proprietary data models and quantitative methods to refine its recommendations, helping institutional investors identify high-potential stocks early before their mispricing gains broader market attention. Another important competitive advantage of GS is their large scale and vast team of analysts, which allow them to cover a wide range of companies in a timely manner.
READ ALSO: 13 Most Undervalued NASDAQ Stocks To Buy According To Hedge Funds
Unlike other major banks, Goldman Sachs is also known for its highly skilled macro research team, which is known for occasionally making bold, out-of-consensus predictions regarding the broad market. One relatively recent example is an October 2024 paper in which the Goldman Sachs team expressed a rather pessimistic and significantly out-of-consensus view that the US stock market will likely deliver mediocre returns in the next 10 years, driven by high valuations and elevated market concentration. More precisely, Goldman Sachs estimated that the main US stock market index will only deliver a nominal annualized return of 3% during the subsequent 10 years, significantly below the 13% during the previous decade. Here’s a snippet of the report that sheds light on the causes of such potentially low future returns:
“Market concentration is particularly important today because the US equity market is currently near its highest level of concentration in 100 years. The intuition for why concentration matters for long-term returns relates to growth in addition to valuation. Our historical analyses show that it is extremely difficult for any firm to maintain high levels of sales growth and profit margins over sustained periods of time. The same issue plagues a highly concentrated index. As sales growth and profitability for the largest stocks in an index decelerate, earnings growth and therefore returns for the overall index will also decelerate. The current extremely high level of market concentration is one of the main drags on our return forecast. If our model were to exclude this variable, our baseline return forecast would be roughly 4 pp higher (7% rather than 3%)”
While the aforementioned findings are bad news for passive investors who are long the entire US equity market through ETFs and other broad market instruments, Goldman Sachs claims that peak market concentrations have historically been followed by prolonged periods of declining concentration. This trend has materialized through the equal-weight index—dominated by small caps—outperforming the value-weight index, which is largely driven by large caps. In other words, the key takeaway for investors is that pockets of outperformance will always exist, and hidden opportunities should be observed with smaller caps and underfollowed names. The Goldman Sachs team of analysts covers a wide array of stocks and regularly issues reports with ‘Buy’ ratings that could potentially uncover undervalued stocks to invest in. Their deep research and industry expertise provide valuable insights that allow investors to take advantage of market inefficiencies.
A farmer in overalls, harvesting a golden cornfield with a tractor in the background.
To compile our list of 10 undervalued stocks we analyzed recent stock reports issued by Goldman Sachs analysts with a “Buy” rating. For each stock, we included the forward P/E ratio and ranked the companies from most expensive to least expensive. We also include the number of hedge funds that own each stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Forward P/E ratio: 17.94
Number of Hedge Fund Holders: 45
Corteva, Inc. (NYSE:CTVA) is an agricultural company specializing in seed and crop protection solutions. It develops and sells genetically modified and hybrid seeds under brands like Pioneer and Brevant, along with herbicides, insecticides, and fungicides for farmers worldwide. The company operates in key agricultural markets across North America, Latin America, Europe, and Asia-Pacific, serving row crop and specialty crop growers. CTVA integrates biotechnology, digital agriculture, and research-driven innovations to enhance crop yields and sustainability. It maintains a global supply chain with in-house production and strategic partnerships, focusing on productivity, regulatory compliance, and environmental stewardship.
Corteva, Inc. (NYSE:CTVA)’s outlook for 2025 is showing positive momentum with record crop demand expected to continue and tight inventories, particularly in corn which is at its tightest level in a decade. The company has guided for EBITDA of $3.7 billion at midpoint, representing a 10% increase over 2024, with EBITDA margins projected to grow between 100-150 basis points. CTVA has also made significant progress in reducing royalty expenses, bringing down the net royalty expense from $800 million in 2019 to approximately $200 million currently, with a goal to achieve royalty neutrality by 2028. In the biologicals segment, CTVA has strengthened its position through strategic acquisitions and is expanding its presence in the US market through both direct and licensing channels.
Corteva, Inc. (NYSE:CTVA) maintains a strong balance sheet with robust cash flow generation, having returned $1 billion in buybacks last year and committed to another $1 billion in buybacks for the coming year. Looking ahead, management sees significant opportunities in gene editing technology, which they believe will be transformational for agriculture, potentially enabling yield advantages, healthier food, and more sustainable production. The company is also positioning itself to capitalize on the emerging biofuels opportunity, which could potentially be larger than the ethanol market from 25 years ago. With a forward P/E ratio of 17.94, CTVA is one of Goldman Sachs’s undervalued stocks.
Overall CTVA ranks 9th on our list of the 10 undervalued stocks to invest in according to Goldman Sachs. While we acknowledge the potential of CTVA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CTVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks To Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
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