FMC Corporation (FMC) is a Philadelphia, Pa.-based global agricultural sciences company that is committed to assisting producers to produce food, feed, fiber, and fuel for a growing global population, while adapting to changing environmental conditions. FMC's innovative crop protection solutions, which include biologicals, crop nutrition, digital, and precision agriculture, enable producers, crop consultants, and turf and pest management specialists to meet their most difficult issues while safeguarding the environment.
The company's shares have gained 45.5% in price over the past six months and 18.9% over the past three months, to close yesterday's trading session at $132.21.
Last month, FMC announced a three-year partnership with the National Council of Societies for the Prevention of Cruelty to Animals (NSPCA). Over the length of the partnership, FMC will provide $300,000 to the NSPCA's initiatives that focus on wildlife conservation, animal care, and education. Furthermore, it has made Barron's annual list of America's Most Sustainable Companies, the only agricultural company on the list.
Here is what could shape FMC's performance in the near term:
Industry Tailwinds
The COVID-19 pandemic has had a severe impact on the agriculture business. However, it has recovered from pandemic lows in 2021 due to robust demand, supply chain restrictions, and a strengthening economy. Agricultural commodity prices have risen dramatically this year, owing to rising expenses and unprecedented 40-year high inflation. Furthermore, the Russia-Ukraine war has caused a surge in global agricultural commodity prices. Rising prices have boosted the fundamental performance of agricultural-related companies like FMC.
Robust Financials
During the fourth quarter, ended Dec. 31, 2021, FMC's revenue increased 22.7% year-over-year to $1.41 billion. Its gross margin increased 22.6% year-over-year to $614.7 million. The company's net income grew 290.1% from the year-ago value to $193.1 million, while its EPS grew 300% from the prior-year quarter to $1.52.
Strong Profitability
FMC's 43% trailing-12-months net income margin is 40.7% higher than the 30.6% industry average. Also, its ROC, EBITDA margin, and ROA are 51.3%, 23.4%, and 26.6% higher than the respective industry averages. And its $820.10 million in cash from operations is 129.7% higher than the $357 million industry average.
Impressive Growth Prospects
The Street expects FMC's revenues and EPS to rise 6.9% and 11.5%, respectively, year-over-year to $5.39 billion and $7.73 in its fiscal 2022. In addition, FMC's EPS is expected to rise at an 11.5% CAGR over the next five years. Moreover, the company has an impressive earnings surprise history; it topped the Street’s EPS estimates in each of the trailing four quarters.
POWR Ratings Reflect Solid Prospects
FMC has an overall grade of B, which equates to a Buy rating in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. FMC has a B grade for Quality. FMC's solid earnings and revenue growth potential is consistent with the Quality grade.
Among the 88 stocks in the A-rated Chemicals industry, FMC is ranked #21.
Beyond what I stated above, we have graded FMC for Sentiment, Growth, Value, Stability, and Momentum. Get all FMC ratings here.
Bottom Line
FMC has exhibited a robust financial performance in its last reported quarter owing to its strong product portfolio and increased organic growth investments. In addition, given the favorable analysts' estimates and the company's fundamental strength, the stock could deliver solid gains in the near term. So, we think the stock could be a great bet now.
How Does FMC Corporation (FMC) Stack Up Against its Peers?
FMC has an overall POWR B Rating, which equates to a Buy rating. Check out these other stocks within the same industry with A (Strong Buy) ratings: Valhi Inc. (VHI), American Vanguard Corp. (AVD), and Kronos Worldwide Inc. (KRO).
FMC shares fell $132.21 (-100.00%) in premarket trading Tuesday. Year-to-date, FMC has gained 20.80%, versus a -3.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Pragya Pandey
Pragya is an equity research analyst and financial journalist with a passion for investing. In college she majored in finance and is currently pursuing the CFA program and is a Level II candidate.
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