FMC Corporation ( FMC Quick Quote FMC - Free Report) is benefiting from higher demand, pricing actions and new product launches amid headwinds from higher raw material and logistics costs. The company’s shares have declined 4.8% in the past year compared with a 15% decline of the industry.
Image Source: Zacks Investment Research FMC Corp, a Zacks Rank #3 (Hold) stock, is gaining from higher demand for its products, its portfolio strength and contributions of new products. The company is seeing healthy demand for its industry leading products, driven by strong global agricultural market fundamentals. The strong demand environment coupled with the company’s price increase actions is driving its top line. The company is actively taking price increase measures to mitigate the impact of cost inflation. The company is well placed to capitalize on the underlying strength in global crop protection markets thanks to high commodity prices. It is seeing demand strength for diamides and insecticides in North America on higher crop commodity prices. Demand for Rynaxypyr brands continues to grow in the region. Strong demand is also being witnessed in corn, sugarcane and soybean applications in Brazil, aided by higher planted areas and high commodity prices. Demand for herbicides also remains strong in Australia. FMC Corp is also seeing strength in its insecticide portfolio in Asia. Moreover, FMC remains focused on boosting its market position and strengthening its product portfolio. It is investing in technologies and products as well as new launches to enhance value to the farmers. New products launched in Europe, North America and Asia are gaining significant traction and are contributing to volume growth. Product introductions are expected to support the company’s results this year. FMC also remains committed to return value to shareholders leveraging healthy cash flows. It expects to generate free cash flow of $515-$735 million in 2022. FMC Corp also expects to buy back stock worth $500-$600 million and pay dividends worth around $270 million in 2022. However, FMC Corp is exposed to headwinds from rising logistics and raw materials costs due to the intensified supply disruptions. The supply disruptions, exacerbated by the Russia-Ukraine conflict, have resulted in rising costs of some raw materials and active ingredients. Along with higher packaging costs, raw material and logistics costs are likely to remain elevated through 2022. Pandemic-related shutdowns in China and elevated energy costs in Europe are the other concerns. Higher raw materials and logistics costs might impact the company’s performance. The company also faces challenges from unfavorable currency swings. It is particularly challenged by currency headwinds associated with the weakening of European currencies. Currency headwinds are expected to drag the company’s performance in 2022.
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include
Nutrien Ltd. ( NTR Quick Quote NTR - Free Report) , Albemarle Corporation ( ALB Quick Quote ALB - Free Report) and Cabot Corporation ( CBT Quick Quote CBT - Free Report) . Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 174.6% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 22.9% upward over the last 60 days. You can see . the complete list of today’s Zacks #1 Rank stocks here Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 5.8%, on average. NTR has rallied roughly 41% in a year. Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 116.1% upward in the past 60 days. Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 32% in a year. The company flaunts a Zacks Rank #1. Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days. Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 10% over a year.