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Why Is FMC (FMC) Down 4.6% Since Last Earnings Report?

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A month has gone by since the last earnings report for FMC (FMC - Free Report) . Shares have lost about 4.6% in that time frame, underperforming the S&P 500.

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

FMC Corp Tops Earnings and Revenue Estimates in Q4

FMC Corp logged profits (as reported) of $32.4 million or 24 cents per share in fourth-quarter 2018, down from $530.1 million or $3.94 per share earned a year ago. The bottom line in the reported quarter includes a non-cash charge of $106 million to adjust reserves for environmental liabilities.

Barring one-time items, adjusted earnings came in at $1.69 per share in the quarter, up 54% year over year. The results were driven by strong performance of the Agricultural Solutions unit and lower than expected taxes. Earnings also exceeded the Zacks Consensus Estimate of $1.65.

The company’s revenues climbed roughly 24% year over year to $1,219.2 million. It also surpassed the Zacks Consensus Estimate of $1,197.5 million. The Agricultural Solutions segment delivered strong results in the quarter on the back of solid demand.

FY18 Results

For 2018, profit was $502.1 million or $3.69 per share, down around 6% from $535.8 million or $3.99 per share recorded in 2017. Adjusted earnings were $6.29 per share, up from $2.71 a year ago.

Revenues for the year went up 64% year over year to $4,727.8 million.

Segment Review

Revenues from the Agricultural Solutions division shot up around 27% year over year (up 18% on an adjusted basis) to around $1,099.4 million in the reported quarter, driven by strong demand in all regions and increased prices in Brazil. Segment EBITDA went up 35% year over year to $301.7 million.

Revenues from the Lithium unit went up around 6% year over year to $119.8 million. Segment EBITDA fell 5% to $49 million.

Balance Sheet

The company ended 2018 with cash and cash equivalents of $161.7 million, a roughly 43% year-over-year decline. Long-term debt declined around 27% year over year to $2,179 million.

Outlook

The company provided its outlook for full-year 2019 and first-quarter 2019. The guidance excludes the impact of the Lithium segment. Lithium will be reported as discontinued operations when the company reports first-quarter 2019 results.

For 2019, FMC Corp expects adjusted earnings per share of $5.55-$5.75 (barring any impact from share buybacks), up 8% at the midpoint compared with recast 2018 earnings. The company also expects revenues of $4.45-$4.55 billion for the year, up 5% at the midpoint compared with recast 2018 revenues.

Adjusted EBITDA for 2019 is forecast in the band of $1.165-$1.205 billion, an increase of 7% at the midpoint compared with recast 2018 adjusted EBITDA.

For first-quarter 2019, FMC Corp expects adjusted earnings in the range of $1.58 to $1.68 per share, up 3% at the midpoint compared with recast first-quarter 2018 earnings. The company sees revenues of $1.18-$1.21 billion for the quarter, up 8% at the midpoint versus recast first-quarter 2018 revenues.

Adjusted EBITDA for the quarter is forecast in the range of $320-$340 million, flat year-over-year at the midpoint compared with recast first-quarter 2018 adjusted EBITDA. The company sees headwinds from higher raw material costs and currency in first-half 2019.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, FMC has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, FMC has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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