The company beat the Zacks Consensus Estimate for earnings in two of the last four quarters while missing in the other two. FMC has a negative trailing four-quarter earnings surprise of around 3.3%, on average. The company reported a negative earnings surprise of around 2.2% in the last reported quarter.
FMC's fourth-quarter performance is likely to have been impacted by inventory de-stocking by growers in the distribution channel. However, the benefits of cost-saving and pricing measures and efforts to enhance product portfolio with new launches are likely to be reflected in its financials.
Shares of FMC have plunged 56.3% in the past year against an 18.8% fall of the industry.
Image Source: Zacks Investment Research
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter sales for FMC is currently pegged at $1,249 million, suggesting a 23% year-over-year fall.
The consensus estimate for North America’s revenues is currently pegged at $352 million, suggesting a 20% year-over-year decline.
The Zacks Consensus Estimate for Latin America sales is pegged at $480 million, indicating a 30.1% year-over-year plunge.
The consensus estimate for Europe, the Middle East and Africa (EMEA) sales stands at $192 million, calling for an 8.6% year-over-year fall.
The same for Asia is pegged at $240 million, indicating a 13.7% decline on a year-over-year basis.
Some Factors at Play
Contributions of new products are expected to have supported the company’s fourth-quarter performance. FMC is dedicated to bolstering its product portfolio through strategic investments in technologies and new launches across Europe, North America and Asia aimed at delivering enhanced value to farmers. Recent product introductions have been well-received, with revenues from products launched in the past five years rising 4% year over year in the last reported quarter. The acquisition of BioPhero ApS, a Denmark-based pheromone research and production company, underscores FMC's commitment to innovative and sustainable crop protection solutions, further enriching its product portfolio and R&D pipeline.
The company is actively taking price increase measures to mitigate the impact of cost inflation. Price hikes in North America, EMEA and Asia Price are expected to have supported its fourth-quarter performance. It is also likely to have benefited from improved input costs, favorable product mix and cost-control actions.
Despite these positives, FMC faces challenges stemming from inventory de-stocking in Latin America, mainly due to aggressive de-stocking by growers in response to lower fertilizer and herbicide prices, along with higher interest rates increasing inventory carrying costs. This trend has impacted volumes in the third quarter and is expected to continue to have affected performance in the fourth quarter. Higher interest expenses, primarily driven by increased U.S. interest rates, pose additional headwinds, with FMC seeing full-year 2023 interest expenses in the range of $240-$245 million, up from earlier estimates of $220-$230 million. These factors are expected to have exerted pressure on margins despite efforts to mitigate costs through price increases and cost-control measures.
Our proven model does not predict an earnings beat for FMC this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earning beat.
Earnings ESP: Earnings ESP for FMC is -8.14%. The Zacks Consensus Estimate for the fourth quarter is currently pegged at $1.09. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: FMC currently carries a Zacks Rank #5 (Strong Sell).
FMC Corporation Price and EPS Surprise
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post earnings beat this quarter:
Eldorado Gold Corporation EGO, slated to release earnings on Feb 22, has an Earnings ESP of +3.28% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for EGO’s fourth-quarter earnings is pegged at 20 cents.
Agnico Eagle Mines Limited AEM,expected to release earnings on Feb 15, has an Earnings ESP of +8.23% and carries a Zacks Rank #3 at present.
The consensus mark for AEM’s fourth-quarter earnings is currently pegged at 46 cents.
Kinross Gold Corporation KGC, which is slated to release its earnings on Feb 14, has an Earnings ESP of +12.11% and a Zacks Rank #3 at present.
The consensus estimate for KGC’s fourth-quarter earnings is currently pegged at 9 cents.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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