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FMC Corp. Well Placed on Growth Actions, Lithium Strength

On Dec 9, we issued an updated research report on chemical maker FMC Corp.FMC .

FMC Corp. swung to a profit in third-quarter 2016. Its adjusted earnings of 67 cents per share topped the Zacks Consensus Estimate of 58 cents. Adjusted earnings also rose from 42 cents logged a year ago. The company sees adjusted earnings in the band of $2.76 to $2.86 a share for 2016.

FMC Corp.'s shares have gained 50.3% year-to-date, outperforming the Zacks categorized 'Chemicals-Diversified' industry's gain of 17% over the same period, partly reflecting its forecast-topping earnings performance over the trailing four quarters.

FMC Corp. is well placed to gain from its strategic investments, new product launches and synergies of Cheminova A/S acquisition. The company is focused on strengthening its product portfolio and expanding production capacity. FMC Corp. remains committed to invest in technologies in its agriculture business and launching new products with a goal to enhance value to the farmers.

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., in October, also landed a new long-term supply deal with Quebec, Canada-based Nemaska Lithium, Inc. Under the deal, Nemaska will provide FMC Corp. with 8,000 metric tons of lithium carbonate annually starting in mid-2018. The deal will further diversify FMC Corp.'s supply sources. FMC Corp. has raised its earnings expectations for the Lithium unit for 2016 based on strong year-to-date performance.

Moreover, acquisitions and development agreements are adding strength to the company's core 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.

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. Moreover, the sale of the alkali chemicals business has enabled FMC Corp. to de-lever its balance sheet to an extent which is best fit for the company.

FMC Corp. sports a Zacks Rank #1 (Strong Buy).

FMC CORP Price

FMC CORP Price | FMC CORP Quote

Other Stocks to Consider

Other well-placed companies in the chemical space include The Chemours Company CC , Koppers Holdings Inc. KOP and Celanese Corporation CE .

Chemours holds a Zacks Rank #1 and has an expected earnings growth of around 60.1% for the current year. You can see the complete list of today's Zacks #1 Rank stocks here.

Koppers Holdings, a Zacks Rank #1 stock, has an expected earnings growth of 62.4% for the current year.

Celanese sports a Zacks Rank #2 (Buy) and has an expected earnings growth of around 9.5% for the current year.

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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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