Is a Beat in the Cards for Travelers (TRV) in Q1 Earnings?
A month has gone by since the last earnings report for FMC Corporation FMC. Shares have added about 2.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is FMC due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
FMC Corp’s Q4 Earnings Top Estimates, Profit Shoots Up
FMC Corp.’s profits skyrocketed in fourth-quarter 2017, buoyed by a hefty gain (of $727 million) from the sale of its Health and Nutrition division. Consolidated profit, as reported, shot up to $530 million or $3.94 per share in the reported quarter from $16 million or 12 cents per share a year ago.
Barring one-time charges and gains, earnings came in at $1.10 per share in the quarter, exceeding the Zacks Consensus Estimate of $1.03.
The company’s revenues soared roughly 42% year over year to $980 million in the reported quarter, boosted by the acquisition of a major portion of DuPont's Crop Protection business. Sales, however, trailed the Zacks Consensus Estimate of $1,002 million.
For 2017, the company logged profits of $536 million or $3.99 per share, a roughly two-and-a-half-fold surge from $209 million or $1.56 per share recorded in 2016. Adjusted earnings for the year came in at $2.71 per share, up 41% year over year.
Revenues for the full year went up 13% year over year to around $2.9 billion.
Revenues from the Agricultural Solutions division jumped 40% year over year to $866 million in the fourth quarter, driven by the DuPont asset buyout. Sales were also supported by double-digit growth across North America, Asia and Europe. Segment earnings were $189 million, up 48% year over year.
Revenues from the Lithium unit surged 60% year over year to $113 million. Segment earnings more than doubled year-over-year to $44 million, driven by higher volume from the company’s new hydroxide operations in China and increased year-over-year prices.
FMC Corp. ended 2017 with cash and cash equivalents of $283 million, a more than four-fold year over year rise.
Long-term debt was $2,993 million, up around 66% year over year.
Moving ahead, FMC Corp. sees adjusted earnings in the band of $5.20 to $5.60 per share for 2018. For first-quarter 2018, the company expects adjusted earnings in the range of $1.45 to $1.59 per share. The company also plans to conduct a separate listing of its Lithium unit in the second half of this year to create two separate public companies.
For the Agricultural Solutions unit, FMC Corp. expects revenues for 2018 in the range of $3.95 billion to $4.15 billion. Segment EBITDA for the year are expected to be in the band of $1.05 billion to $1.15 billion. EBITDA for first-quarter 2018 have been projected in the range of $290 million to $320 million.
FMC Corp. expects revenues in the range of $420 million to $460 million for the Lithium unit for 2018. Segment EBITDA are forecasted to be in the band of $180 million to $200 million for the full year. For the first quarter, EBITDA is expected to be in the range of $44 million to $48 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been four revisions higher for the current quarter compared to one lower. In the past month, the consensus estimate has shifted by 21.6% due to these changes.
FMC Corporation Price and Consensus
FMC Corporation Price and Consensus | FMC Corporation Quote
At this time, FMC has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, FMC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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