FMC Corp (FMC) Q4 Earnings: What's in Store for the Stock?

FMC Corp.FMC will release its fourth-quarter 2016 results after the bell on Feb 6.

The chemical maker's adjusted earnings for third-quarter 2016 topped the Zacks Consensus Estimate (a 15.52% positive surprise). Revenues fell year over year and met expectations.

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

Factors to Consider

FMC Corp. sees adjusted earnings in the band of $2.76 to $2.86 per share for 2016.

For the fourth quarter, the company expects earnings for its Agricultural Solutions division in the band of $117-$137 million. For the Health and Nutrition segment, earnings for the quarter are expected to be between $53 million and $57 million. Moreover, FMC Corp. expects earnings for its Lithium unit in the range of $16-$20 million for the fourth quarter.

FMC Corp.'s shares have gained 67.9% over a year, outperforming the Zacks categorized Chemicals-Diversified industry's gain of 28.4% over the same period, partly reflecting its forecast-topping earnings performance over the trailing four quarters.

FMC Corp. should gain from strategic investments, synergies of Cheminova A/S acquisition and new product launches. The company remains committed to expand its market position and strengthen its portfolio. FMC Corp. is investing in technologies in its agriculture business and launching new products with a goal to enhance value to the farmers.

Acquisitions and development agreements are also adding strength to the company's agricultural business. The buyout of Cheminova A/S has reinforced FMC Corp.'s agriculture business and expanded its access in major agricultural end markets. The company is making a good progress with the integration of the acquired operations of Cheminova. FMC Corp. expects to deliver Cheminova-related full run rate cost savings of $140 million to $160 million by mid-2017.

In its lithium business, the company is seeing strong demand across specialty end markets. A significant long-term driver for the lithium business is the expected rapid adoption of lithium-ion batteries in electric vehicles. The company, in May 2016, said that it will triple its lithium hydroxide production capacity by adding 20,000 metric tons per year. It will execute this expansion in three phases over the next few years. The move is based on the growing demand for electric vehicles.

FMC Corp. is also reducing corporate costs through reduced discretionary spending, global procurement initiatives and layoffs. The company has also restructured its operations in Brazil to align it with market conditions and rationalize product offerings.

However, FMC Corp. faces challenging agriculture market fundamentals. Agricultural market conditions remain challenging in North America due to elevated channel inventory levels and lower farm income due to weak commodity prices, affecting farmer demand in the region. Moreover, FMC Corp. is exposed to currency headwinds, stemming from a strong U.S. dollar.

FMC Corporation Price and EPS Surprise

FMC Corporation Price and EPS Surprise | FMC Corporation Quote

Earnings Whispers

Our proven model does not conclusively show that FMC Corp. is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for FMC Corp. is 0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at 89 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: FMC Corp. currently carries a Zacks Rank #2, which when combined with a 0.00% ESP, makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks That Warrant a Look

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

Albemarle Corporation ALB has Earnings ESP of +2.67% and carries a Zacks Rank #2. You can see the complete list of today's Zacks #1 Rank stocks here.

Kraton Corporation KRA has an Earnings ESP of +3.23% and a Zacks Rank #2.

LyondellBasell Industries N.V. LYB has an Earnings ESP of +1.90% and a Zacks Rank #2.

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Kraton Corporation (KRA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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