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Here's Why You Should Retain FMC Corp. (FMC) in Your Portfolio

FMC Corporation FMC is gaining from favorable demand for its herbicides and insecticides and its efforts to expand product portfolio and boost market position amid certain headwinds including higher input costs.

The company’s shares have risen 17.7% over a year against the 4% decline of its industry.

Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

What’s Going in FMC’s Favor?

FMC Corp. is seeing healthy demand for its industry leading products, driven by strong global agricultural market fundamentals. It is well placed to capitalize on the underlying strength in global crop protection markets thanks to high commodity prices.

The strong demand environment coupled with the company’s price increase actions is driving its top line. It is actively taking price increase measures to mitigate the impact of cost inflation.

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. New products launched in Europe, North America and Asia are gaining significant traction and are contributing to volume growth. Product introductions are expected to support the company’s results this year.

The acquisition of BioPhero ApS, a Denmark-based pheromone research and production company, also adds biologically produced state-of-the-art pheromone insect control technology to the company’s product portfolio and R&D pipeline, highlighting FMC's role as a leader in delivering innovative and sustainable crop protection solutions.

The company also remains committed to return value to shareholders leveraging healthy cash flows. It expects to generate free cash flow of $440-$560 million in 2022. FMC Corp. also expects to return up to around $470 million to shareholders through dividends and share repurchases in 2022.

A Few Concerns

FMC Corp. faces headwinds from higher logistics and raw materials costs due to supply disruptions. The supply disruptions, exacerbated by the Russia-Ukraine conflict, have resulted in rising costs of some raw materials and active ingredients. Along with higher packaging costs, raw material and logistics costs are likely to remain elevated through 2022. Pandemic-related shutdowns in China and elevated energy costs in Europe are the other concerns. Higher raw materials and logistics costs might impact the company’s performance.

The company is also is exposed to challenges from unfavorable currency swings. It is particularly challenged by currency headwinds associated with the weakening of European currencies. Currency headwinds are expected to drag the company’s performance in 2022.

FMC Corporation Price and Consensus

 

FMC Corporation Price and Consensus
FMC Corporation Price and Consensus

FMC Corporation price-consensus-chart | FMC Corporation Quote

Stocks to Consider

Better-ranked stocks worth considering in the basic materials space include Olympic Steel, Inc. ZEUS, Commercial Metals Company CMC and Steel Dynamics, Inc. STLD.

Olympic Steel currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for ZEUS's current-year earnings has been revised 4.8% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Olympic Steel’s earnings beat the Zacks Consensus Estimate in three of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 25.4%, on average. ZEUS has rallied around 65% in a year.

Commercial Metals currently carries a Zacks Rank #1. The consensus estimate for CMC's current-year earnings has been revised 13.8% upward in the past 60 days.

Commercial Metals’ earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 19.7%, on average. CMC has gained around 51% in a year.

Steel Dynamics has a projected earnings growth rate of 36.1% for the current year. The Zacks Consensus Estimate for STLD’s current-year earnings has been revised 7.3% upward in the past 60 days.

Steel Dynamics has a trailing four-quarter earnings surprise of roughly 6.2%. STLD has rallied roughly 77% in a year. The company currently carries a Zacks Rank #2 (Buy).

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