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FMC Corp (FMC) Q4 Earnings Preview: Another Beat in Store?

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FMC Corporation (FMC - Free Report) will release its fourth-quarter 2017 results after the bell on Feb 12.

The chemical maker’s adjusted earnings of 70 cents per share for the third quarter topped the Zacks Consensus Estimate of 63 cents, translating into a positive surprise of 11.1%. Revenues rose roughly 3% year over year to $646 million in the quarter, but trailed the Zacks Consensus Estimate of $690 million.

FMC Corp.’s shares have rallied 49.1% over a year. The company has also significantly outperformed its industry’s gain of roughly 16.5% over the same time frame.  


FMC Corp. beat the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, delivering an average negative surprise of 2.8%.

Let’s see how things are shaping up for this announcement.

Earnings Whispers

Our proven model shows that FMC Corp. is likely to beat on earnings estimates this quarter. This is because it has the right combination of two key ingredients, a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Zacks ESP: Earnings ESP for FMC Corp. is currently pegged at +1.70%. This is because the Most Accurate estimate stands at $1.05 while the Zacks Consensus Estimate is pegged at $1.03. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: FMC Corp. currently carries a Zacks Rank #3. The combination of a favorable Zacks Rank and a positive ESP makes us reasonably confident of an earnings beat.

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement, especially when the company is seeing negative estimate revisions.

Factors at Play

FMC Corp., in November 2017, raised its earnings outlook for 2017 factoring in the impact of two months contribution from the DuPont Crop Protection acquisition. It now sees adjusted earnings in the range of $2.59-$2.69 per share for the year, up from the prior view of $2.30-$2.50.

For the Agricultural Solutions unit, FMC Corp. expects revenues in the range of $2.5-$2.6 billion for 2017. Segment earnings for the year are expected to be in the band of $465 million to $485 million. Earnings for the fourth quarter have been projected in the range of $168-$188 million.

Moreover, FMC Corp. expects revenues in the range of $340-$360 million for the Lithium unit for 2017. Segment earnings are forecasted to be in the band of $124 to $128 million for the full year. For the fourth quarter, earnings are expected to be in the range of $41-$45 million, reflecting doubling of earnings compared to year-ago quarter.

The Zacks Consensus Estimate for revenues for FMC Corp. for the fourth quarter stands at $1,002 million, reflecting an estimated year over year growth of 15.9%.

Net sales for the Agricultural Solutions segment for the fourth quarter is estimated rise 47.7% year over year as the Zacks Consensus Estimate for the December quarter is pegged at $913 million.
Moreover, the Zacks Consensus Estimate for net sales for the Lithium unit is projected to be $114 million for the fourth quarter, reflecting an estimated 60.6% rise on a year over year basis.

The acquisition of a major portion of DuPont's Crop Protection business has provided a significant growth platform for FMC’s Agricultural Solutions unit. The buyout significantly increases the company’s presence in Asia and Europe. Contributions of the acquisition are expected to drive revenues in this unit in the to-be-reported quarter.

FMC Corp. is also witnessing strong momentum in its Lithium unit. The company is expanding its lithium hydroxide production capacity. It is executing this expansion in three phases. The move is based on the growing demand for electric vehicles. The lithium business is expected to deliver strong earnings growth for full-year 2017. Earnings in the fourth quarter for the unit are expected to be driven by the new hydroxide units that are now in full commercial operations.

FMC Corp., last month, revised its operating agreements in Argentina. The move will enable the company to expand production and complete a major step toward the intended separation of its lithium business this year.

The amended operating agreements update FMC Corp’s corporate social responsibility programs and royalties in Argentina and remove restrictions that could prevent a change of control over its lithium business.

FMC Corp. expects to double its production in Argentina over the next several years with total annual output to be more than 40,000 metric tons of lithium carbonate equivalents. The company is expected to provide an update on plans to separate its lithium business and expand its Argentina operations during its fourth-quarter earnings call.

FMC Corporation Price and Consensus


FMC Corporation Price and Consensus | FMC Corporation Quote


Other Stocks to Consider

Here are some companies in the basic materials space you may also want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The Mosaic Company (MOS - Free Report) has an Earnings ESP of +9.50% and a Zacks Rank #1.
Huntsman Corporation (HUN - Free Report) has an Earnings ESP of +3.27% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle Mines Limited (AEM - Free Report) has an Earnings ESP of +8.26% and carries a Zacks Rank #3.
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