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FMC Corp (FMC) to Post Q2 Earnings: What's in the Cards?

Zacks Equity Research

FMC Corporation FMC will release second-quarter 2019 results on Jul 30, after the closing bell.

The stock has lost 3.9% in the past year compared with the industry’s 35% decline.

Factors at Play in Q2

In April, the company stated that for the second quarter it expects revenues in the range of $1.185-$1.215 billion, which indicates 4% growth at the midpoint compared with recast second-quarter 2018.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $1,189 million, which indicates a decline of 5.8% year over year.

The company also expects EBITDA between $325 million and $345 million in the to-be-reported quarter. Per the company, the projected figure indicates a rise of 5% year over year at the midpoint despite considerable foreign exchange and manufacturing cost headwinds. Moreover, EBITDA range for the second quarter reflects $55 million cost headwind similar to the first quarter and relatively lower foreign exchange headwinds of $20 million. The company believes that price-hike actions will offset around 80% of these headwinds in the second quarter.    

Adjusted earnings per share is expected in the range $1.60-$1.70, indicating 10% growth at the midpoint compared with recast second-quarter 2018 figure.

The company is witnessing strong demand for its industry leading products, which is driving revenues. In Latin America, the company is witnessing strong demand from cotton growers in Brazil as well as solid demand for insecticides in soybean applications.

Strong demand for pre-emergent herbicides and insecticides is also driving the company’s agriculture business in North America. It expects that increase in corn and wheat acreage will drive growth in North America in 2019.

The company is also committed to expand its market position and strengthen portfolio. It is focused on investing in technologies and products as well as new launches to enhance value to the farmers. Product introductions are expected to support its results in this year. The company expects new products to account for around $60-$70 million in incremental sales growth in 2019.

What the Zacks Model Says?

Our proven model does not show that FMC Corp is likely to beat estimates in the to-be-reported quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for FMC Corp is -1.75%. The Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at $1.61 and $1.64, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: FMC Corp currently carries a Zacks Rank #3, which when combined with a negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows that they have the right combination of elements to post earnings beat this quarter:

Barrick Gold Corporation GOLD has an Earnings ESP of +1.56% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here

Carpenter Technology Corporation CRS has an Earnings ESP of +0.27% and carries a Zacks Rank #3.

Covia Holdings Corporation CVIA has an Earnings ESP of +8.57% and a Zacks Rank #3.

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