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FMC Up 11.5% Since Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for FMC Corporation (FMC - Free Report) . Shares have added about 11.5% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

FMC Q2 Earnings and Revenues Beat Estimates

FMC posted a profit (on a reported basis) of $75 million or $0.56 per share in second-quarter 2017 as compared with $65 million or $0.49 per share a year ago.

Barring one-time items, earnings came in at $0.48 per share in the quarter, narrowly exceeding the Zacks Consensus Estimate of $0.47. The company’s adjusted earnings for the reported quarter exclude around $0.24 attributable to the reporting of the Health & Nutrition unit in discontinued operations.

The company’s revenues rose roughly 7% year over year to $657 million in the reported quarter. Sales also beat the Zacks Consensus Estimate of $612 million.

Segment Review

Revenues from the Agricultural Solutions division rose around 6% year over year to $583 million in the quarter with 10% increase in volume partly offset by 4% decline in price. Segment profits were $96 million, down 5% year over year, impacted by price and geographic mix shift.

Revenues from the Lithium unit went up 17% to $74 million. Segment earnings grew 47% year over year to $24 million, aided by higher prices and improved mix that were partly offset by increased costs.

Balance Sheet

FMC Corp. ended the quarter with cash and cash equivalents of $113.2 million, up around 21% year over year. Long-term debt was $1,592.3 million, down around 20% year over year.

Outlook

FMC Corp. now sees adjusted earnings in the band of $2.30 to $2.50 per share for 2017 (narrowed from prior view of $2.20 to $2.60 per share).

For the Agricultural Solutions unit, FMC Corp. expects revenues in the range of $2.3-$2.4 billion for 2017, versus earlier view of $2.2-$2.4 billion. Segment earnings for the year are expected to be in the band of $415 million to $445 million. Earnings for third-quarter 2017 have been projected in the range of $100-$120 million, reflecting an increase of around 22% at the mid-point compared with the prior-year quarter.

FMC Corp. now sees revenues in the range of $340-$360 million (up from $325-$365 million expected earlier) for the Lithium unit for 2017. Segment earnings are forecasted to be in the band of $115 to $125 million (up from $100 to $120 million expected earlier) for the full year. For the third quarter, earnings are expected to be in the range of $30-$35 million, reflecting an increase of around 85% at the mid-point compared with the prior-year quarter.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision higher for the current quarter compared to two lower.

FMC Corporation Price and Consensus

VGM Scores

At this time, FMC's stock has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. Following the exact same course, the stock was allocated a grade of F on the value side, putting it in the fifth quintile 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.

The company's stock is suitable solely for growth based on our style scores.

Outlook

While estimates have been moving downward, the magnitude of the revision is net zero. Notably, the stock has a Zacks Rank #3 (Hold). We expect in-line returns from the stock in the next few months.




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