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Here's Why You Should Retain FMC Stock in Your Portfolio
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FMC Corporation (FMC - Free Report) is benefiting from its efforts to expand product portfolio, boost market position and its cost actions amid headwinds including soft demand conditions.
The company’s shares are down 48.6% in a year compared with a 10.7% decline of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Image Source: Zacks Investment Research
New Products, Cost Actions Aid FMC
FMC remains focused on strengthening its product portfolio. It is investing in technologies as well as new product launches to enhance value to the farmers. New products launched in Europe, North America and Asia are gaining significant traction. Product introductions are expected to support the company’s results this year. FMC generated $590 million in sales in 2023 from new products launched in the past five years. Sales of products launched in the last five years accounted for 14% of total revenues in the fourth quarter. It expects revenues from new products to grow by roughly $200 million in 2024.
The acquisition of BioPhero ApS, a Denmark-based pheromone research and production company, also adds biologically produced state-of-the-art pheromone insect control technology to the company’s product portfolio and R&D pipeline, highlighting FMC's role as a leader in delivering innovative and sustainable crop protection solutions.
The company is also expected to benefit from reduced input costs, lower interest expenses, favorable product mix and its cost-control actions. FMC benefited from lower input costs and diligent control in SG&A and R&D spending in the fourth quarter. It also expects its restructuring actions, which include indirect spending cuts and workforce reductions, to result in $50-$75 million of cost savings in 2024. These actions are likely to contribute to its EBITDA growth.
Demand Weakness Ails
The company faces headwinds from inventory de-stocking. The demand weakness due to the aggressive de-stocking by growers in the distribution channel is hurting its volumes as witnessed in the fourth quarter. The de-stocking is due to lower prices of fertilizers and certain non-selective herbicides as well as higher interest rates, which have increased the carrying cost of inventory. Continued inventory management is expected to weigh on the company’s volumes in the first quarter of 2024.
FMC sees continued de-stocking through the first half of 2024. It forecasts first-quarter revenues to be between $925 million and $1.075 billion, reflecting a 26% decrease at the midpoint compared to the first quarter of 2023, driven by lower volumes due to de-stocking across all regions.
Moreover, the company faces headwinds from higher cost inventory and lower fixed cost absorption in 2024. FMC expects adjusted EBITDA for the first quarter in the band of $135-$165 million, suggesting a 59% decline at the midpoint versus the prior-year period’s levels. The downside is expected to be caused by lower sales and gross margin impacts from high-cost inventory carried over from the previous year.
Better-ranked stocks worth a look in the basic materials space include, AlphaMetallurgical Resources Inc. (AMR - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. AMR delivered a trailing four-quarter earnings surprise of roughly 24.8%, on average. Its shares are up around 124% in a year. AMR currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 45% in the past year. CRS currently carries a Zacks Rank #1.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 75% in the past year.
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Here's Why You Should Retain FMC Stock in Your Portfolio
FMC Corporation (FMC - Free Report) is benefiting from its efforts to expand product portfolio, boost market position and its cost actions amid headwinds including soft demand conditions.
The company’s shares are down 48.6% in a year compared with a 10.7% decline of its industry.
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Image Source: Zacks Investment Research
New Products, Cost Actions Aid FMC
FMC remains focused on strengthening its product portfolio. It is investing in technologies as well as new product launches to enhance value to the farmers. New products launched in Europe, North America and Asia are gaining significant traction. Product introductions are expected to support the company’s results this year. FMC generated $590 million in sales in 2023 from new products launched in the past five years. Sales of products launched in the last five years accounted for 14% of total revenues in the fourth quarter. It expects revenues from new products to grow by roughly $200 million in 2024.
The acquisition of BioPhero ApS, a Denmark-based pheromone research and production company, also adds biologically produced state-of-the-art pheromone insect control technology to the company’s product portfolio and R&D pipeline, highlighting FMC's role as a leader in delivering innovative and sustainable crop protection solutions.
The company is also expected to benefit from reduced input costs, lower interest expenses, favorable product mix and its cost-control actions. FMC benefited from lower input costs and diligent control in SG&A and R&D spending in the fourth quarter. It also expects its restructuring actions, which include indirect spending cuts and workforce reductions, to result in $50-$75 million of cost savings in 2024. These actions are likely to contribute to its EBITDA growth.
Demand Weakness Ails
The company faces headwinds from inventory de-stocking. The demand weakness due to the aggressive de-stocking by growers in the distribution channel is hurting its volumes as witnessed in the fourth quarter. The de-stocking is due to lower prices of fertilizers and certain non-selective herbicides as well as higher interest rates, which have increased the carrying cost of inventory. Continued inventory management is expected to weigh on the company’s volumes in the first quarter of 2024.
FMC sees continued de-stocking through the first half of 2024. It forecasts first-quarter revenues to be between $925 million and $1.075 billion, reflecting a 26% decrease at the midpoint compared to the first quarter of 2023, driven by lower volumes due to de-stocking across all regions.
Moreover, the company faces headwinds from higher cost inventory and lower fixed cost absorption in 2024. FMC expects adjusted EBITDA for the first quarter in the band of $135-$165 million, suggesting a 59% decline at the midpoint versus the prior-year period’s levels. The downside is expected to be caused by lower sales and gross margin impacts from high-cost inventory carried over from the previous year.
FMC Corporation Price and Consensus
FMC Corporation price-consensus-chart | FMC Corporation Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include, Alpha Metallurgical Resources Inc. (AMR - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Hawkins, Inc. (HWKN - Free Report) .
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. AMR delivered a trailing four-quarter earnings surprise of roughly 24.8%, on average. Its shares are up around 124% in a year. AMR currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained around 45% in the past year. CRS currently carries a Zacks Rank #1.
The Zacks Consensus Estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 75% in the past year.