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FMC Corp (FMC) to Post Q3: Will the Earnings Streak Continue?

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FMC Corporation (FMC - Free Report) will release its third-quarter 2018 results after the bell on Nov 5.

The chemical maker saw its profits surge roughly 74% year over year to $129.7 million or 96 cents per share in second-quarter 2018. Adjusted earnings of $1.78 per share for the quarter topped the Zacks Consensus Estimate of $1.71, translating into a positive surprise of roughly 4.1%.

The company's revenues jumped roughly 92% year over year to $1,262.3 million, also surpassing the Zacks Consensus Estimate of $1,228.7 million.

FMC Corp beat estimates in each of the trailing four quarters, delivering an average positive surprise of 8.7%.

Shares of FMC Corp are down around 17.5% so far this year, outperforming the industry’s decline of roughly 21.2%.


 

Can the company surprise investors again or is it heading for a possible pullback? Let’s see how things are shaping up for this announcement.

Factors at Play

FMC Corp, in August, backed its adjusted earnings expectations for 2018 in the band of $5.90 to $6.20 per share, a year over year increase of 123%. For third-quarter 2018, the company expects adjusted earnings in the range of 87-97 cents per share.

For the Agricultural Solutions unit, FMC Corp sees revenues for 2018 in the range of $4.1 billion to $4.3 billion. It also expects segment EBITDA for the full year in the band of $1.17 billion to $1.23 billion. For the third quarter, segment EBITDA has been forecast in the range of $195 million to $215 million.

Moreover, FMC Corp expects revenues in the range of $430 million to $460 million for its Lithium business for 2018. It also raised the full-year outlook for Lithium EBITDA by $2 million to a range of $195 million to $205 million. For the third quarter, EBITDA for the business has been forecast in the range of $45 million to $49 million while revenues are projected to be in the band of $105 million to $115 million.

The Zacks Consensus Estimate for revenues for FMC Corp. for the third quarter stands at $1,010 million, reflecting an estimated year over year growth of 56.2%.

Net sales for the Agricultural Solutions segment for the third quarter is estimated rise 63% year over year as the Zacks Consensus Estimate for the September quarter is pegged at $900 million.
 
Moreover, the Zacks Consensus Estimate for net sales for the Lithium business is projected to be $111 million for the third quarter, reflecting an estimated 18.1% rise on a year over year basis.

The company’s revenues for the Agricultural Solutions segment surged 98% year over year in the second quarter, mainly driven by the acquisition of a major portion of DuPont's Crop Protection business. Contributions of the acquisition are expected to drive revenues in this unit in the to-be-reported quarter.

The DuPont asset buyout has provided a significant growth platform for FMC’s Agricultural Solutions unit. The buyout significantly increases the company’s presence in Asia and Europe.

Moreover, higher volumes and prices across all major product categories drove Lithium results in the second quarter and the momentum is expected to continue in the September quarter.

We also expect the company to provide an update on its progress on the separation of the Lithium business which has been now rebranded as Livent Corporation. Livent started trading on the NYSE last month after its initial public offering (IPO). 

FMC Corporation Price and EPS Surprise

 

FMC Corporation Price and EPS Surprise | FMC Corporation Quote

Earnings Whispers

Our proven model does not conclusively show that FMC Corp is likely to beat the Zacks Consensus Estimate this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for FMC Corp is currently pegged at -1.64%. This is because the Most Accurate Estimate stands at 90 cents while the Zacks Consensus Estimate is pegged at 92 cents. 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, which when combined with a negative ESP, makes surprise prediction difficult.

Note that we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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

Nutrien Ltd. (NTR - Free Report) has an Earnings ESP of +10.43% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) has an Earnings ESP of +0.74% and carries a Zacks Rank #2.

Osisko Gold Royalties Ltd (OR - Free Report) has an Earnings ESP of +19.05% and carries a Zacks Rank #3.  

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