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FMC Corp (FMC) to Post Q4 Earnings: What's in the Cards?

Zacks Equity Research
·4-min read

FMC Corporation FMC will release fourth-quarter 2019 results on Feb 5, after the closing bell.

The company has trailing four-quarter positive earnings surprise of 7%, on average. Fourth-quarter results are likely to reflect favorable demand for its herbicides and insecticides. However, some unfavorable impacts from raw materials cost inflation and currency swings are likely to have affected margins in the to-be-reported quarter.

Let’s see how things are shaping up for this announcement.

What to Expect

The Zacks Consensus Estimate for fourth-quarter sales is currently pegged at $1,194 million, which suggests 2.1% decline year over year.

In October 2019, the company raised revenues and earnings guidance for 2019. For the full year, it now projects revenues between $4.58 billion and $4.62 billion, up from the previous range $4.5-$4.6 billion. The revised guidance indicates a rise of 7% at the midpoint from recast 2018 figure.

Adjusted earnings per share (EPS) for 2019 are expected in the range of $5.80-$5.90 compared with the company’s earlier view of $5.68-$5.88. The revised guidance indicates an increase of 12% at the midpoint from recast 2018 figure.

Moreover, fourth-quarter revenues are projected in the band of $1.17-$1.21 billion, which indicates 8% growth at the midpoint from recast fourth-quarter 2018. Adjusted EBITDA is predicted in the range of $300-$320 million that indicates 13% increase at the midpoint from recast fourth-quarter 2018 figure. Adjusted EPS for fourth-quarter 2019 are forecast in the range of $1.46-$1.56, which calls for 3% growth at the midpoint from recast fourth-quarter 2018 figure.

Factors at Play in Q4

The company’s fourth-quarter performance is likely to have been driven by volume growth in all regions. Benefits from strong demand for the company’s herbicides and insecticides are likely to get reflected in fourth-quarter 2019 results. Moreover, quarterly margins are expected to have gained from higher pricing across key regions.

However, FMC Corp is exposed to challenges from higher raw material costs. It witnessed an unfavorable impact of $39 million from raw material cost inflation on EBITDA in the third quarter. The trend is likely to have continued into the fourth quarter. The company expects an impact of $40 million in fourth-quarter EBITDA due to raw material cost headwinds. The company is also exposed to headwind from unfavorable currency translation, which might have impacted its sales and margins.

Zacks Model

Our proven model does not conclusively predict an earnings beat for FMC Corp this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for FMC Corp is 0.00%. The Most Accurate Estimate and the Zacks Consensus Estimate are both currently pegged at $1.53. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: FMC Corp carries a Zacks Rank #4 (Sell).

Stocks Poised to Beat Estimates

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

Bunge Limited BG, slated to release fourth-quarter 2019 earnings on Feb 12, has an Earnings ESP of +18.18% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Cleveland-Cliffs Inc. CLF, scheduled to release fourth-quarter 2019 earnings on Feb 27, has an Earnings ESP of +6.25% and carries a Zacks Rank #2.

AK Steel Holding Corporation AKS, scheduled to release fourth-quarter 2019 earnings on Feb 27, has an Earnings ESP of +16.67% and carries a Zacks Rank #3.

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FMC Corporation (FMC) : Free Stock Analysis Report
 
Cleveland-Cliffs Inc. (CLF) : Free Stock Analysis Report
 
AK Steel Holding Corporation (AKS) : Free Stock Analysis Report
 
Bunge Limited (BG) : Free Stock Analysis Report
 
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Zacks Investment Research