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FMC Corp (FMC) Poised on Strong Demand & Portfolio Expansion
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We issued an updated research report on FMC Corporation (FMC - Free Report) on Apr 13.
The company is benefiting from strong demand for its herbicides and insecticides and its efforts to expand product portfolio amid certain headwinds including raw material cost inflation.
The company’s shares are down 13.2% year to date, compared with the 26.5% decline of its industry.
FMC is gaining from higher demand for its products, its portfolio strength and new product launches. In Latin America, the company is seeing healthy demand from sugarcane growers in Brazil as well as solid demand for herbicides in soybean applications in Argentina. Strong demand for herbicides and insecticides is also driving the company’s agriculture business in North America. Healthy demand for insecticides is also driving volumes in Asia.
The company expects the global crop protection market to grow in the low-single digits in 2020 with strongest growth in Asia. It also expects growth in the crop protection market in Brazil to be driven by soybeans and corn.
Moreover, FMC remains focused on boosting its market position and strengthening its product portfolio. It is investing in technologies and products as well as new launches to enhance value to the farmers. Product introductions are expected to support its results in this year. The company expects new products to contribute roughly 1.5% of overall volume growth in 2020.
FMC also remains committed to return value to shareholders leveraging healthy cash flows. The company, in late 2019, hiked its quarterly dividend by 10% to 44 cents per share. It also repurchased $400 million of shares in 2019 and expects to buyback $400-$500 million of its shares in 2020.
However, FMC is exposed to challenges from higher raw material costs, partly due to supply disruptions in China amid the coronavirus outbreak. The company also faces headwind from higher tariffs.
The company saw an unfavorable impact of $25 million from raw material cost inflation and tariffs on adjusted EBITDA in the fourth quarter of 2019. Headwinds related to higher costs were $167 million in 2019. The company also sees $32 million cost headwind in the first quarter of 2020. FMC envisions raw material cost headwind to persist through the first half of 2020.
FMC also faces headwind from unfavorable currency translation. It sees currency headwind on EBITDA of $45 million for full-year 2020. Currency impact for the first quarter is forecast to be $16 million.
Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .
Scotts Miracle-Gro has an expected earnings growth rate of 15.9% for the current fiscal year. The company’s shares have gained roughly 36% in the past year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2. The company’s shares have surged roughly 148% in a year.
Newmont has a projected earnings growth rate of 83.3% for the current year. The company’s shares have rallied around 65% in a year. It currently has a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
FMC Corp (FMC) Poised on Strong Demand & Portfolio Expansion
We issued an updated research report on FMC Corporation (FMC - Free Report) on Apr 13.
The company is benefiting from strong demand for its herbicides and insecticides and its efforts to expand product portfolio amid certain headwinds including raw material cost inflation.
The company’s shares are down 13.2% year to date, compared with the 26.5% decline of its industry.
FMC is gaining from higher demand for its products, its portfolio strength and new product launches. In Latin America, the company is seeing healthy demand from sugarcane growers in Brazil as well as solid demand for herbicides in soybean applications in Argentina. Strong demand for herbicides and insecticides is also driving the company’s agriculture business in North America. Healthy demand for insecticides is also driving volumes in Asia.
The company expects the global crop protection market to grow in the low-single digits in 2020 with strongest growth in Asia. It also expects growth in the crop protection market in Brazil to be driven by soybeans and corn.
Moreover, FMC remains focused on boosting its market position and strengthening its product portfolio. It is investing in technologies and products as well as new launches to enhance value to the farmers. Product introductions are expected to support its results in this year. The company expects new products to contribute roughly 1.5% of overall volume growth in 2020.
FMC also remains committed to return value to shareholders leveraging healthy cash flows. The company, in late 2019, hiked its quarterly dividend by 10% to 44 cents per share. It also repurchased $400 million of shares in 2019 and expects to buyback $400-$500 million of its shares in 2020.
However, FMC is exposed to challenges from higher raw material costs, partly due to supply disruptions in China amid the coronavirus outbreak. The company also faces headwind from higher tariffs.
The company saw an unfavorable impact of $25 million from raw material cost inflation and tariffs on adjusted EBITDA in the fourth quarter of 2019. Headwinds related to higher costs were $167 million in 2019. The company also sees $32 million cost headwind in the first quarter of 2020. FMC envisions raw material cost headwind to persist through the first half of 2020.
FMC also faces headwind from unfavorable currency translation. It sees currency headwind on EBITDA of $45 million for full-year 2020. Currency impact for the first quarter is forecast to be $16 million.
FMC Corporation Price and Consensus
FMC Corporation price-consensus-chart | FMC Corporation Quote
Zacks Rank & Stocks to Consider
FMC currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth considering in the basic materials space are The Scotts Miracle-Gro Company (SMG - Free Report) , NovaGold Resources Inc. (NG - Free Report) and Newmont Corporation (NEM - Free Report) .
Scotts Miracle-Gro has an expected earnings growth rate of 15.9% for the current fiscal year. The company’s shares have gained roughly 36% in the past year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NovaGold has a projected earnings growth rate of 11.1% for the current year. It currently carries a Zacks Rank #2. The company’s shares have surged roughly 148% in a year.
Newmont has a projected earnings growth rate of 83.3% for the current year. The company’s shares have rallied around 65% in a year. It currently has a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>