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Why Is FMC (FMC) Down 4.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for FMC (FMC). Shares have lost about 4.8% 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 Top Estimates in Q3

FMC Corp. recorded earnings (as reported) of $1.22 per share in third-quarter 2021, up 44% from 85 cents reported a year ago.  

Barring one-time items, adjusted earnings per share were $1.43, topping the Zacks Consensus Estimate of $1.30.
 
Revenues were $1,194 million for the quarter, up around 10% from the year-ago quarter. It surpassed the Zacks Consensus Estimate of $1,166.4 million.

Revenues were driven by a 9% rise in volumes and 1% favorable impact of currencies. The company benefited from strong product demand, its focus on increasing prices and cost discipline amid headwinds from supply-chain and logistics issues in the reported quarter.

Regional Sales Performance

Sales dropped 6% year over year in North America in the quarter, impacted by a shift in volume by geography from the company’s global diamide partnerships.

Sales in Latin America went up 11% year over year in the reported quarter on soybean and corn growth in Brazil and Argentina as well as higher prices.

In EMEA, sales rose 12% year over year on higher demand for diamides and herbicides in the region.

Revenues climbed 20% year over year in Asia on the back of broad-based volume gains and higher prices across nearly all countries.

Financials

The company had cash and cash equivalents of $341 million at the end of the quarter, up roughly 15% year over year. Long-term debt was $2,631.7 million, down around 13% year over year.

The company repurchased shares worth $200 million in the third quarter.

Guidance

For 2021, FMC continues to expect revenues between $4.9 billion and $5.1 billion, indicating a rise of 8% at the midpoint versus 2020.

The company also reaffirmed its adjusted EBITDA guidance in the band of $1.29-$1.35 billion for 2021, indicating a 6% rise at the midpoint versus 2020.

FMC raised its adjusted earnings per share outlook for 2021 to the range of $6.59-$6.99 from $6.54-$6.94 expected earlier, suggesting an increase of 10% at the midpoint compared with 2020.

Free cash flow for 2021 is 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 fourth-quarter 2021, revenues are projected in the band of $1.27-$1.47 billion, reflecting an increase of 19% at the midpoint compared with the prior-year quarter. Adjusted earnings are forecast in the range of $1.80-$2.20 per share, representing an increase of 41% at the midpoint compared with the prior-year quarter.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

Currently, FMC has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile 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 upward for the stock, and the magnitude of these revisions looks promising. Notably, 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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