FMC Corp Touches Fresh 52-Week High: What's Driving It?

Shares of FMC Corp. FMC scaled a fresh 52-week high of $72.73 on Apr 5, before retracing to close the day at $71.85.

FMC Corp. has a market cap of roughly $9.5 billion and average volume of shares traded in the last three months is around 1,528.6K. The company has an expected long-term EPS growth of around 10.9%.

FMC Corp. outperformed the Zacks categorized Chemicals-Diversified industry over a year, aided by its expansion actions and strong demand across specialty end markets. The company’s shares gained 94.7% over this period compared with the industry’s gain of 21.1% over the same period.

 

Driving Factors

FMC Corp. sees healthy growth in its adjusted earnings in 2017. It expects adjusted earnings in the band of $3.20 to $3.60 per share for 2017, a year over year increase of 20% at the mid-point of the guidance range.

FMC Corp. is gaining from strategic investments, synergies of Cheminova A/S acquisition and new product launches. The company remains committed to expand its market position and strengthen its portfolio. FMC Corp. is investing in technologies in its agriculture business and launching new products with a goal to enhance value to the farmers. It plans to launch around 40 new products in 2017.

Acquisitions and development agreements are also adding strength to the company’s agricultural business. The buyout of Cheminova A/S has reinforced FMC Corp.'s agriculture business and expanded its access in major agricultural end markets. The company is making a good progress with the integration of the acquired operations of Cheminova. FMC Corp. expects to deliver Cheminova-related full run rate cost savings of $140 million to $160 million by mid-2017.

FMC Corp. also recently agreed to buy a significant portion of DuPont's DD Crop Protection business. Under the deal terms, FMC Corp. will buy DuPont's Cereal Broadleaf Herbicides and Chewing Insecticides portfolios as well as some of the latter’s Crop Protection research and development pipeline and organization. These assets generated revenues of around $1.4 billion last year.

The deal is expected to complete in the fourth quarter of 2017. After deal closure, FMC Corp.’s Agricultural Solutions unit will become the fifth biggest crop protection chemical company in the world by sales with estimated annual revenues of around $3.8 billion. The company expects the acquisition to be immediately accretive to its adjusted earnings per share.

In its lithium business, FMC Corp. is seeing strong demand across specialty end markets. A significant long-term driver for the lithium business is the expected rapid adoption of lithium-ion batteries in electric vehicles. The company, in May 2016, said that it will triple its lithium hydroxide production capacity by adding 20,000 metric tons per year. It will execute this expansion in three phases over the next few years. The move is based on the growing demand for electric vehicles.

FMC Corp., in Oct 2016, also landed a new long-term supply deal with Quebec, Canada-based Nemaska Lithium, Inc. Under the deal, Nemaska will provide FMC Corp. with 8,000 metric tons of lithium carbonate annually starting in mid-2018. The deal will further diversify FMC Corp.’s supply sources. The company expects its lithium business to deliver strong earnings growth in 2017.

That said, FMC Corp. faces challenging agriculture market fundamentals. Agricultural market conditions remain challenging in North America due to elevated channel inventory levels and lower farm income due to weak commodity prices, affecting farmer demand in the region. FMC Corp. expects the global crop protection chemical market to remain flat in 2017.

FMC Corp. currently carries a Zacks Rank #3 (Hold).

FMC Corporation Price and Consensus

 

FMC Corporation Price and Consensus | FMC Corporation Quote

Stocks to Consider

Better-placed companies in the chemicals space include The Chemours Company CC and Kronos Worldwide, Inc. KRO, both holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected long-term growth of 15.5%.

Kronos has an expected long-term growth of 5%.

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