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A month has gone by since the last earnings report for FMC (FMC). Shares have lost about 0.7% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is FMC due for a breakout? 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 drivers.
FMC Corp's Earnings and Sales Surpass Estimates in Q1
FMC Corp recorded earnings (as reported) of $1.64 per share in first-quarter 2022, up 17% from $1.40 reported in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.88, topping the Zacks Consensus Estimate of $1.69.
Revenues were $1,350.8 million in the quarter, up around 13% from the year-ago quarter’s levels. The top line surpassed the Zacks Consensus Estimate of $1,275.4.
Revenues were driven by an 8% rise in volumes and an 8% contribution from price. The company benefited from a strong demand environment and price increase actions amid headwinds from raw material, packaging and logistics availability issues as well as higher input and labor costs.
Regional Sales Performance
Sales climbed 30% year over year in North America in the quarter, driven by strong volume and price growth in several crops including tree fruits, nuts, vines, corn and soy.
Sales in Latin America rose 31% year over year in the reported quarter on strong volume growth in soybean, corn and sugarcane as well as price increases and a 6% favorable currency impact.
In Europe, the Middle East and Africa, sales rose 11% year over year organically driven by pricing actions across the region and healthy demand for products such as Rynaxypyr active ingredient for corn and top fruit and herbicides for sunflowers. Sales were flat including the currency impact from the weakening of the Turkish lira, the euro and other European currencies.
Revenues went up 2% year over year in Asia, aided by higher prices and strength in Australia and The Association of Southeast Asian Nations (ASEAN) countries.
The company had cash and cash equivalents of $365.1 million at the end of the quarter, down roughly 12% year over year. Long-term debt was $2,732.4 million, up around 3.8% year over year.
For 2022, FMC continues to expect revenues between $5.25 billion and $5.55 billion, indicating a rise of 7% at the midpoint from 2021 levels. Sales are expected to be driven by higher volumes and prices in all regions.
The company also forecasts adjusted EBITDA in the band of $1.32-$1.48 billion for 2022, indicating a 6% rise at the midpoint from 2021 levels.
FMC now expects adjusted earnings per share for 2022 in the range of $6.70-$8.00 (compared with $6.8-$8.10 expected earlier), suggesting an increase of 6% at the midpoint from 2021 figures.
Free cash flow for 2022 is projected to be $515-$735 million. The company also expects to repurchase $500-$600 million shares in 2022.
For second-quarter 2022, revenues are projected in the band of $1.31-$1.39 billion, reflecting an increase of 9% at the midpoint compared with the prior-year quarter’s levels. Adjusted earnings are forecast in the range of $1.70-$2.00 per share, representing an increase of 2% at the midpoint from the prior-year quarter’s levels. It also expects adjusted EBITDA in the range of $330-$370 million for the quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -5.28% due to these changes.
At this time, FMC has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was 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.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FMC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
FMC belongs to the Zacks Chemical - Diversified industry. Another stock from the same industry, Eastman Chemical (EMN), has gained 5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Eastman Chemical reported revenues of $2.71 billion in the last reported quarter, representing a year-over-year change of +12.7%. EPS of $2.06 for the same period compares with $2.13 a year ago.
Eastman Chemical is expected to post earnings of $2.67 per share for the current quarter, representing a year-over-year change of +8.5%. Over the last 30 days, the Zacks Consensus Estimate has changed +1.2%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Eastman Chemical. Also, the stock has a VGM Score of B.
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