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FMC (FMC) Down 1.6% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for FMC (FMC). Shares have lost about 1.6% 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 drivers.

FMC Misses Q3 Earnings and Revenue Estimates

FMC Corp. recorded a loss of 3 cents per share in third-quarter 2023, narrower from a profit of 95 cents reported in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 44 cents, missing the Zacks Consensus Estimate of 45 cents.

Revenues were $981.9 million in the quarter, down around 29% from the year-ago quarter’s levels. The top line fell short of the Zacks Consensus Estimate of $982 million.

The quarter's revenues were primarily influenced by a 26% decline in volume. Price hikes in North America, EMEA and Asia contributed positively, although price reductions in Latin America outweighed them. Foreign exchange effects had no significant impact on revenues.

Regional Sales Performance

Sales dropped 34% year over year in North America to $160 million in the quarter as partners, the distribution channel and growers reduced inventory. It missed the consensus estimate of $263.5 million.

Sales in Latin America fell 33% year over year to $466 million in the reported quarter. This decrease was primarily attributed to reduced volumes, mainly as a result of extensive destocking in Brazil and, to a lesser extent, drought conditions in Argentina. It beat the consensus estimate of $393.1 million.

In the quarter, revenues in Asia witnessed a year-over-year decline of 28%, amounting to $207 million. This decrease was primarily due to ongoing destocking activities across the region. It missed the Zacks Consensus Estimate of $263.5 million.

In EMEA, sales fell 1% year over year to $149 million in the reported quarter. The decline in volumes was mitigated by higher pricing and favorable currency effects. It was below the Zacks Consensus Estimate of $174.4 million.

Financials

The company had cash and cash equivalents of $323.8 million at the end of the quarter, down roughly 11% year over year. Long-term debt was roughly $3.02 billion, up around 10.6% year over year.

The company returned around $73 million to its shareholders through dividends during the quarter.

Guidance

For 2023, FMC expects revenues in the range of $4.48-$4.72 billion, indicating a decline of 21% at the midpoint from 2022 levels. The company expects adjusted EBITDA in the band of $0.97-$1.03 billion, indicating a 29% year-over-year decline at the midpoint. FMC now projects adjusted earnings per share for 2023 in the range of $3.57-$4.13, suggesting a decrease of 48% at the midpoint from the 2022 level.

The company revised its full-year free cash flow projection to a range between –$860 million and –$640 million. This adjustment is a result of the anticipated decrease in second-half EBITDA and the effects on working capital stemming from increased inventory and decreased payables.

The company expects fourth-quarter revenues to be in the range of $1.14-$1.38 billion, indicating a 22% fall at the midpoint from the year-ago quarter’s levels. The company also predicts adjusted EBITDA for the fourth quarter to be in the range of $246-$306 million. This represents a 36% plunge at the midpoint when compared with the year-ago period’s figures. Adjusted EPS is forecast in the range of $0.89-$1.38 per share, indicating a 52% plunge from earnings reported in the fourth quarter of 2022.

How Have Estimates Been Moving Since Then?

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

The consensus estimate has shifted -19.56% due to these changes.

VGM Scores

Currently, FMC has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, 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 D. 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. It's no surprise FMC has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

FMC is part of the Zacks Chemical - Diversified industry. Over the past month, Dow Inc. (DOW), a stock from the same industry, has gained 6.9%. The company reported its results for the quarter ended September 2023 more than a month ago.

Dow Inc. reported revenues of $10.73 billion in the last reported quarter, representing a year-over-year change of -24%. EPS of $0.48 for the same period compares with $1.11 a year ago.

For the current quarter, Dow Inc. is expected to post earnings of $0.39 per share, indicating a change of -15.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -8.5% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Dow Inc. Also, the stock has a VGM Score of B.

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