FMC Corporation FMC benefits from efforts to expand its product portfolio through new product launches and its restructuring actions amid headwinds from pricing and cost pressures and a slower demand recovery.

FMC’s shares are down 14.1% in a year compared with a 7.1% decline of its industry.

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Let’s find out why FMC stock is worth retaining at the moment.

New Products, Restructuring Actions Aid FMC Stock

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 Pressures to Weigh on FMC’s Margins

FMC is exposed to 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 Stock Price and Consensus

FMC Corporation price-consensus-chart | FMC Corporation Quote

FMC’s Zacks Rank & Other Key Picks

FMC currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Basic Materials space are, Hawkins, Inc. HWKN, IAMGOLD Corporation IAG and Eldorado Gold Corporation EGO, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Hawkins’ current fiscal-year earnings is pegged at $4.14, indicating a rise of 15.3% from year-ago levels. The Zacks Consensus Estimate for HWKN’s current fiscal-year earnings has increased 12.8% in the past 60 days. The stock has rallied around 95% in the past year. 

The consensus estimate for IAMGOLD’s current-year earnings has increased by 46.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 200%. Its shares have shot up roughly 115% in the past year.

The Zacks Consensus Estimate for Eldorado Gold’s current year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 75% in the past year.

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