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Here's Why You Should Retain FMC Stock in Your Portfolio
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FMC Corporation (FMC - Free Report) is gaining from efforts to expand its product portfolio through new product launches and its restructuring actions. However, it is exposed to pricing and cost headwinds and challenges from a slower demand recovery.
The company’s shares are down 27.6% in a year compared with a 6.1% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
New Products, Restructuring Actions Aid FMC
FMC remains focused on strengthening its product portfolio. It is investing in technologies as well as new product launches to enhance value to the farmers. New products launched in Europe, North America and Asia are gaining significant traction. Product introductions are expected to support the company’s results this year. FMC generated $590 million in sales in 2023 from new products launched in the past five years. It expects revenues from new products to grow by roughly $200 million in 2024. It expects a significant amount of volume growth to come from new products in the second half of 2024. FMC is seeing strong gains in new products including Coragen eVo and Premio Star insecticides and the Onsuva fungicide in Latin America.
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 is also expected to benefit from reduced input costs, favorable product mix and its cost-control actions. It benefited from favorable input costs in the second quarter of 2024. FMC is also making progress with its global restructuring and cost-reduction program. It sees benefits from restructuring to contribute $75-$100 million to full-year 2024 adjusted EBITDA, net of inflation.
Pricing and Cost Headwinds to Weigh on FMC’s Margins
The company faces headwinds from pricing pressure in all regions. In the second quarter of 2024, a 14% year-over-year increase in volumes on the back of improved demand was offset by a 10% decline in prices. Lower prices were partly driven by competitive pressure due to demand recovery and strategic pricing on less differentiated products. The pricing pressure is expected to continue in the third quarter.
Factoring in the slower demand recovery and pricing headwinds, FMC has updated its revenue outlook for full-year 2024 and now sees revenues between $4.30 billion and $4.50 billion, indicating a 2% decline at the midpoint compared to 2023. The revised guidance is 4% lower at the midpoint versus its earlier guidance. While the company is seeing a return of demand in most regions, the recovery has been slower than what it had originally expected.
FMC also faces challenges from significant unobserved fixed costs, which are expected to weigh on its profits. It faces headwinds from a higher cost of goods sold (COGS) in the in the third quarter of 2024. It expects COGS headwinds of roughly $40 million in the third quarter mainly related to unabsorbed fixed costs associated with reduced manufacturing activities. Cost headwinds are expected to weigh on FMC’s EBITDA in the third quarter and full-year 2024.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The consensus estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 32% in the past year.
The consensus estimate for Element Solutions’ current-year earnings has increased by 0.7% in the past 60 days. ESI beat the consensus estimate in three of the last four quarters. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $3.65, indicating a year-over-year rise of 63.7%. AEM’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 15.7%. The company’s shares have rallied roughly 70% in the past year.
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Here's Why You Should Retain FMC Stock in Your Portfolio
FMC Corporation (FMC - Free Report) is gaining from efforts to expand its product portfolio through new product launches and its restructuring actions. However, it is exposed to pricing and cost headwinds and challenges from a slower demand recovery.
The company’s shares are down 27.6% in a year compared with a 6.1% decline of its industry.
Image Source: Zacks Investment Research
Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
New Products, Restructuring Actions Aid FMC
FMC remains focused on strengthening its product portfolio. It is investing in technologies as well as new product launches to enhance value to the farmers. New products launched in Europe, North America and Asia are gaining significant traction. Product introductions are expected to support the company’s results this year. FMC generated $590 million in sales in 2023 from new products launched in the past five years. It expects revenues from new products to grow by roughly $200 million in 2024. It expects a significant amount of volume growth to come from new products in the second half of 2024. FMC is seeing strong gains in new products including Coragen eVo and Premio Star insecticides and the Onsuva fungicide in Latin America.
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 is also expected to benefit from reduced input costs, favorable product mix and its cost-control actions. It benefited from favorable input costs in the second quarter of 2024. FMC is also making progress with its global restructuring and cost-reduction program. It sees benefits from restructuring to contribute $75-$100 million to full-year 2024 adjusted EBITDA, net of inflation.
Pricing and Cost Headwinds to Weigh on FMC’s Margins
The company faces headwinds from pricing pressure in all regions. In the second quarter of 2024, a 14% year-over-year increase in volumes on the back of improved demand was offset by a 10% decline in prices. Lower prices were partly driven by competitive pressure due to demand recovery and strategic pricing on less differentiated products. The pricing pressure is expected to continue in the third quarter.
Factoring in the slower demand recovery and pricing headwinds, FMC has updated its revenue outlook for full-year 2024 and now sees revenues between $4.30 billion and $4.50 billion, indicating a 2% decline at the midpoint compared to 2023. The revised guidance is 4% lower at the midpoint versus its earlier guidance. While the company is seeing a return of demand in most regions, the recovery has been slower than what it had originally expected.
FMC also faces challenges from significant unobserved fixed costs, which are expected to weigh on its profits. It faces headwinds from a higher cost of goods sold (COGS) in the in the third quarter of 2024. It expects COGS headwinds of roughly $40 million in the third quarter mainly related to unabsorbed fixed costs associated with reduced manufacturing activities. Cost headwinds are expected to weigh on FMC’s EBITDA in the third quarter and full-year 2024.
FMC Corporation Price and Consensus
FMC Corporation price-consensus-chart | FMC Corporation Quote
Stocks to Consider
Better-ranked stocks in the Basic Materials space are Newmont Corporation (NEM - Free Report) , Element Solutions Inc (ESI - Free Report) and Agnico Eagle Mines Limited (AEM - Free Report) . Newmont and Element Solutions sport a Zacks Rank #1 (Strong Buy), and Agnico Eagle carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The consensus estimate for NEM’s earnings has increased 16% in the past 60 days. The stock has rallied around 32% in the past year.
The consensus estimate for Element Solutions’ current-year earnings has increased by 0.7% in the past 60 days. ESI beat the consensus estimate in three of the last four quarters. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $3.65, indicating a year-over-year rise of 63.7%. AEM’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average earnings surprise being 15.7%. The company’s shares have rallied roughly 70% in the past year.