FMC (FMC) Down 4.3% Since Last Earnings Report: Can It Rebound?

It’s been about a month since FMC’s (FMC) last earnings report. Shares have lost about 4.3% in that time, underperforming the S&P 500.

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

FMC Corp earnings and revenue beat estimates in Q2

FMC Corp. reported earnings of $1.56 per share in the second quarter of 2021, an increase of 11% from the $1.41 reported a year earlier.

Excluding one-time items, adjusted earnings per share were $1.81, exceeding the Zacks Consensus Estimate of $1.77.

Revenue was $1,242 million for the quarter, up approximately 8% from the year-ago quarter. It surpassed the Zacks Consensus Estimate of $1,228 million.

Revenues were driven by 4% volume growth and 4% favorable currency impact. The company achieved strong volume growth in all regions except EMEA, driven by a strong core business and contributions from new product launches.

Regional sales results

During the quarter, North American sales declined 7% year-over-year, impacted by a shift in geographic volume demand from the company’s global diamide partners.

Sales in Latin America increased 15% year-over-year in the quarter on strong demand for insecticides and fungicides, supported by favorable commodity prices and favorable currency fluctuations.

In EMEA, sales increased by 3% year-on-year as higher demand for diamides and herbicides and favourable currency fluctuations were offset by the impact of unfavourable weather conditions and discontinuations of registrations.

Revenues in Asia increased 20% year over year, driven by a stronger insecticide portfolio, particularly in India and Australia, as well as favorable currency effects.

Financial

At the end of the quarter, the company had cash and cash equivalents of $728.5 million, an increase of approximately 113% year over year. Long-term debt was $2,630.8 million, a decrease of approximately 13% year over year.

In the second quarter, the company repurchased shares worth $25 million.

Conductivity

FMC continues to expect 2021 revenues of $4.9 billion to $5.1 billion, an 8% mid-year increase compared to 2020. Growth is expected to be driven primarily by sales volumes and price increases.

The company now projects adjusted EBITDA of $1.29 billion to $1.35 billion (down from the prior guidance of $1.32 billion to $1.42 billion) for 2021, representing a 6% increase at the midpoint compared to 2020. The adjustment reflects continued increases in raw material, packaging and logistics costs.

Additionally, FMC now expects adjusted earnings per share for 2021 to be in the range of $6.54 to $6.94 (compared to the prior forecast of $6.70 to $7.40), representing an increase of 9% compared to 2020.

2021 free cash flow is currently expected to be between $480 million and $570 million, down 4% year-over-year.

The company also expects to repurchase shares worth $350-450 million in 2021.

For the third quarter of 2021, revenue is forecast in the range of $1.13 billion to $1.22 billion, representing an 8% mid-year increase compared to the prior-year quarter. Adjusted earnings are forecast in the range of $1.23-$1.39 per share, representing a 7% mid-year increase compared to the prior-year quarter.

How have estimates changed since then?

Investors have witnessed a downward trend in estimate revisions over the past month. As a result of these changes, the consensus estimate moved by -21.65%.

VGM Results

FMC currently has a solid B Growth Score, a grade with the same momentum score. Charting a somewhat similar path, the stock is rated C on the Value side, in the middle 20% for this investment strategy.

Overall, the stock has an overall VGM Rating of B. If you’re not focused on one strategy, this rating should interest you.

Perspectives

Estimates for the stock have been trending lower overall, and the magnitude of these revisions indicates a downward shift. It is no surprise that FMC has a Zacks Rank #5 (Strong Sell). We expect a lower than average return for the stock over the next few months.

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