FMC Stock To $16?

FMC (FMC) stock has fallen 47% during the past day, and is currently trading at $15.53. Our multi-factor assessment suggests that it may be time to sell FMC stock. We have, overall, a pessimistic view of the stock, and a price of $16 may not be out of reach. We believe there are several things to fear in FMC stock given its overall Weak operating performance and financial condition. Hence, despite its Low valuation, this makes the stock look Risky.

Below is our assessment:

We go beyond just equities. Is a portfolio of 10% commodities, 10% gold, and 2% crypto in addition to equities and bonds – likely to return more during the next 1-3 years, and protect you better if markets crash 20%? We have crunched the numbers.

Let’s get into details of each of the assessed factors but before that, for quick background: With $1.9 Bil in market cap, FMC provides crop protection, plant health, and pest management products, including insecticides, herbicides, and fungicides, operating across North America, Latin America, Europe, the Middle East, Africa, and Asia.

[1] Valuation Looks Low

This table highlights how FMC is valued vs broader market. For more details see: FMC Valuation Ratios

[2] Growth Is Inconsistent

• FMC has seen its top line shrink at an average rate of -7.9% over the last 3 years
• Its revenues have grown 1.2% from $4.1 Bil to $4.1 Bil in the last 12 months
• Also, its quarterly revenues grew 1.2% to $1.1 Bil in the most recent quarter from $1.0 Bil a year ago.

This table highlights how FMC is growing vs broader market. For more details see: FMC Revenue Comparison

[3] Profitability Appears Very Weak

• FMC last 12 month operating income was $693 Mil representing operating margin of 16.8%
• With cash flow margin of 0.8%, it generated nearly $32 Mil in operating cash flow over this period
• For the same period, FMC generated nearly $100 Mil in net income, suggesting net margin of about 2.4%

This table highlights how FMC profitability vs broader market. For more details see: FMC Operating Income Comparison

[4] Financial Stability Looks Very Weak

• FMC Debt was $4.2 Bil at the end of the most recent quarter, while its current Market Cap is $1.9 Bil. This implies Debt-to-Equity Ratio of 214.5%
• FMC Cash (including cash equivalents) makes up $438 Mil of $12 Bil in total Assets. This yields a Cash-to-Assets Ratio of 3.6%

[5] Downturn Resilience Is Weak

FMC has fared worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• FMC stock fell 64.1% from a high of $139.49 on 20 April 2022 to $50.01 on 1 November 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $67.53 on 12 May 2024 , and currently trades at $15.53

 
2020 Covid Pandemic

• FMC stock fell 44.8% from a high of $108.29 on 20 February 2020 to $59.82 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 27 July 2020

 
2008 Global Financial Crisis

• FMC stock fell 62.3% from a high of $34.48 on 17 June 2008 to $12.98 on 27 October 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 1 December 2010

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read FMC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – S&P 500, Russell, and S&P midcap. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.