Shares of FMC Corporation FMC hit a fresh 52-week high of $112.45 on Aug 11, before retracing to close the day at $109.19.
The company has a market cap of around $14.1 billion. Average volume of shares traded in the past three months was around 721.8K. The company has an expected long-term earnings per share growth rate of 10.5%.
The stock has gained 9.4% year to date, outperforming its industry’s 7.4% decline.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.
What’s Going in FMC’s Favor?
Forecast-topping earnings performance in the second quarter and upbeat guidance for 2020 have contributed to the run-up in FMC’s shares. The company’s adjusted earnings per share of $1.72 for the second quarter topped the Zacks Consensus Estimate of $1.65.
Notably, FMC has an impressive earnings surprise history having surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 9.6%.
The company, in its second-quarter call, said that it sees revenues for 2020 to be between $4.68 billion and $4.82 billion, indicating a rise of 3% at the midpoint versus 2019.
Moreover, FMC now expects adjusted earnings per share for 2020 in the range of $6.28-$6.62, compared with its prior view of $6.05-$6.70. The revised guidance reflects an increase of 6% at the midpoint compared with 2019.
The company also envisions adjusted EBITDA of $1.265-$1.325 billion for 2020, compared with $1.23-$1.34 billion expected earlier. The guidance indicates a 6% rise at the midpoint versus 2019.
For third-quarter 2020, revenues are projected in the band of $1.045-$1.105 billion, reflecting an increase of 6% at the midpoint compared with third-quarter 2019. Adjusted earnings are forecast in the range of $1.03-$1.17 per share, indicating a 17% rise at the midpoint versus third-quarter 2019.
Moreover, earnings estimate revisions have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for FMC for the current year has increased around 1.8%. The consensus estimate for the third quarter has also been revised 3.9% upward over the same time frame.
FMC is benefiting from healthy demand for its products, its portfolio strength and new product launches. In Latin America, the company witnessed strong demand for its insecticides and herbicides from sugarcane growers in Brazil as well as solid demand for herbicides in Argentina in wheat and soybean applications in the second quarter. It is also seeing strong sales for the Lucento fungicide in North America. In Asia, demand for herbicides also remain strong in India.
The company also remains focused on boosting its market position and strengthening its product portfolio. It is focused on investing in technologies and products as well as new launches to enhance value to farmers. Product introductions are expected to support its results in this year. The company anticipates new products to contribute 1.5% of revenue growth in 2020 with the biggest contribution expected from EMEA (Europe, Middle East, and Africa).
FMC also remains committed to return value to its shareholders leveraging healthy cash flows. The company, in late 2019, hiked its quarterly dividend by 10% to 44 cents per share. FMC expects to generate free cash flow of $425-$525 million in 2020 and maintain its dividend payout.
FMC Corporation Price and Consensus
FMC Corporation price-consensus-chart | FMC Corporation Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Barrick Gold Corporation GOLD, Equinox Gold Corp. EQX and Eldorado Gold Corporation EGO.
Barrick Gold has a projected earnings growth rate of 74.5% for the current year. The company’s shares have gained around 46% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Equinox Gold has a projected earnings growth rate of 255.2% for the current year. The company’s shares have rallied roughly 97% in a year. It currently carries a Zacks Rank #2 (Buy).
Eldorado Gold has an expected earnings growth rate of 2,225% for the current year. The company’s shares have gained around 32% in the past year. It presently carries a Zacks Rank #2.
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