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FMC (FMC) Down 4.3% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for FMC (FMC). Shares have lost about 4.3% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important drivers.

FMC Corp’s Earnings and Revenues Surpass Estimates in Q2

FMC Corp recorded earnings (as reported) of $1.56 per share in second-quarter 2021, up 11% from $1.41 reported a year ago.  

Barring one-time items, adjusted earnings per share were $1.81, ahead of the Zacks Consensus Estimate of $1.77.

Revenues were $1,242 million for the quarter, up around 8% from the year-ago quarter. It surpassed the Zacks Consensus Estimate of $1,228 million.

Revenues were driven by a 4% rise in volumes and 4% favorable impact of currencies. The company saw strong volume growth in all regions outside of EMEA on the back of strong underlying business and contribution of new product launches.

Regional Sales Performance

Sales dropped 7% year over year in North America in the quarter, impacted by a shift in volume demand by geography from the company’s global diamide partnerships.

Sales in Latin America went up 15% year over year in the reported quarter on strong demand for insecticide and fungicide, aided by favorable commodity prices, and favorable currency swings.

In EMEA, sales rose 3% year over year as higher demand for diamides and herbicides and favorable currency swings were offset by the impacts of unfavorable weather and discontinued registrations.

Revenues climbed 20% year over year in Asia on the back of strength in the insecticide portfolio, especially in India and Australia, and favorable impact of currencies.

Financials

The company had cash and cash equivalents of $728.5 million at the end of the quarter, up roughly 113% year over year. Long-term debt was $2,630.8 million, down around 13% year over year.

The company repurchased shares worth $25 million in the second quarter.

Guidance

For 2021, FMC continues to expect revenues to be between $4.9 billion and $5.1 billion, indicating a rise of 8% at the midpoint versus 2020. The growth is expected to be driven mainly by volumes and price increases.

The company now envisions adjusted EBITDA of $1.29-$1.35 billion (down from earlier view of $1.32-$1.42 billion) for 2021, indicating a 6% rise at the midpoint versus 2020. The revision reflects continued increase in raw materials, packaging and logistics costs.

Moreover, FMC now expects adjusted earnings per share for 2021 in the range of $6.54 to $6.94 (down from $6.70-$7.40 expected earlier), reflecting an increase of 9% at the midpoint compared with 2020.

Free cash flow for 2021 is now projected to be $480-$570 million, indicating a 4% year-over-year decline.

The company also expects to buyback $350-$450 million shares in 2021.

For third-quarter 2021, revenues are projected in the band of $1.13-$1.22 billion, reflecting an increase of 8% at the midpoint compared with the prior-year quarter. Adjusted earnings are forecast in the range of $1.23-$1.39 per share, representing an increase of 7% at the midpoint compared with the prior-year quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -21.65% due to these changes.

VGM Scores

Currently, FMC has a nice Growth Score of B, a grade with the same score on the momentum front. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise FMC has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.


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