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Why Should You Add FMC Corp. (FMC) Stock to Your Portfolio?

Zacks Equity Research
·4-min read

FMC Corporation’s FMC stock looks promising at the moment. The company's shares have gained 12.6% over the past month. It is benefiting from strong demand for its herbicides and insecticides and its efforts to expand product portfolio and boost market position.

Let’s delve deeper into the factors that make this Zacks Rank #2 (Buy) stock an attractive choice for investors right now.

Price Performance

FMC has outperformed the industry it belongs to over a year. The company’s shares have rallied 35% compared with 12.2% decline recorded by the industry. It has also topped the S&P 500’s 9.1% rise over the same period.



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Positive Earnings Surprise History

FMC has an impressive earnings surprise history. It beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 9%.

Estimates Northbound

Earnings estimate revisions have the greatest impact on stock prices. Over the past month, the Zacks Consensus Estimate for FMC for the current year has increased around 1.9%. The consensus mark for 2020 earnings is currently pegged at $6.31 per share, which suggests a year-over-year growth of 3.6%.

Superior Return on Equity (ROE)

FMC’s ROE of 30.3%, as compared with the industry average of 11.5%, manifests the company’s efficiency in utilizing shareholder’s funds.

Capital Allocation

FMC remains committed to return value to shareholders leveraging healthy cash flows. The company, in late 2019, hiked its quarterly dividend by 10% to 44 cents per share. FMC expects to generate free cash flow of $425-$525 million in 2020 and maintain its dividend payout.

Growth Drivers in Place

FMC is gaining from higher demand for its products, its portfolio strength and new product launches, which is driving its revenues.

The company is seeing healthy demand from cotton and sugarcane growers in Brazil as well as solid demand for insecticides in Argentina. Strong demand for herbicides and insecticides is also driving the company’s agriculture business in North America. FMC is witnessing strength in Rynaxypyr insect control product in that region. Demand for fungicides also remain strong in EMEA (Europe, Middle East and Africa).

Moreover, FMC remains focused on boosting its market position and strengthening its product portfolio. It is focused on investing in technologies and products as well as new launches to enhance value to farmers. Product introductions are expected to support its results in this year. The company anticipates new products to contribute 1.5% of revenue growth in 2020 with the biggest contribution expected from EMEA.

FMC Corporation Price and Consensus

 

FMC Corporation Price and Consensus
FMC Corporation Price and Consensus

FMC Corporation price-consensus-chart | FMC Corporation Quote

 

Other Stocks to Consider

Other top-ranked stocks worth considering in the basic materials space are Agnico Eagle Mines Limited AEM, Newmont Corporation NEM and Equinox Gold Corp. EQX.

Agnico Eagle has a projected earnings growth rate of 75.3% for the current year. The company’s shares have rallied roughly 37% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont has an expected earnings growth rate of 81.8% for the current year. The company’s shares have shot up roughly 70% in the past year. It currently carries a Zacks Rank #2.

Equinox Gold has a projected earnings growth rate of 65.5% for the current year. The company’s shares have surged around 58% in a year. It currently has a Zacks Rank #2.

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Newmont Corporation (NEM) : Free Stock Analysis Report
 
FMC Corporation (FMC) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
Equinox Gold Corp. (EQX) : Free Stock Analysis Report
 
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Zacks Investment Research