FMC Stock Faces Troubling Times After Rough Q4 Performance

FMC stock (NYSE: FMC), known for its agricultural science products aimed at enhancing crop yield and quality, has suffered a significant 37% decline over the past week. The company reported mixed results for the fourth quarter, exceeding earnings expectations but falling short on revenue, which has led to a gloomy forecast for 2025. Sales reached $1.22 billion, missing analysts’ predictions of $1.34 billion, primarily due to low prices and adverse foreign exchange conditions. In contrast, adjusted earnings per share came in at $1.79, beating the consensus estimate of $1.60.

Stock Performance and Market Comparisons

FMC’s stock has dropped 43% since the start of 2024, while the broader S&P 500 index has risen 26%. This decline, particularly severe last week, highlights ongoing inventory de-stocking challenges affecting performance. For those seeking a potentially smoother investment route, the High-Quality portfolio has outperformed the S&P, delivering over 91% returns since its inception.

Quarterly Results Breakdown

FMC’s revenue of $1.22 billion for Q4 was an increase of 7% year-over-year, with a 12% rise on an organic basis. The company experienced a notable 15% increase in volumes due to greater demand in North America, though pricing remained weak. Examining the regional performance, North America saw a 23% increase, Latin America decreased by 10%, Asia increased by 10%, EMEA rose by 18%, and Plant Health sales surged 33%.

Profit Margins and Future Outlook

Adjusted EBITDA margins for FMC expanded by 550 basis points to 27.7% in Q4, compared to 22.2% in the same quarter last year. This margin expansion, coupled with higher revenues, led to earnings of $1.79 per share, which was a 67% increase year-over-year. However, the company forecasts its 2025 sales at $4.25 billion and adjusted earnings of $3.48 per share, both significantly below market expectations of $4.40 billion and $4.36 per share, respectively.

Investor Reaction and Market Volatility

The disparity between FMC’s outlook and investor expectations resulted in a sharp decline in stock price, falling over 30% immediately following the earnings announcement. Such fluctuations are not new for FMC. Historical data indicates that the stock has displayed greater volatility than the S&P 500 over recent years.

Long-Term Investment Considerations

In contrast, the Trefis High Quality (HQ) Portfolio, comprised of 30 stocks, has shown lesser volatility. This portfolio has comfortably outperformed the S&P 500 over the past four years. Stocks within the HQ Portfolio have provided superior returns with reduced risk compared to the benchmark index, presenting a more stable investment option.

Valuation Perspective

In light of the current economic uncertainties surrounding interest rate changes and ongoing trade tensions, FMC might experience similar challenges as in previous years (2021, 2023, and 2024) and underperform against the S&P over the next year. Nevertheless, the stock appears undervalued at $35, trading at just 1.0x trailing revenues, compared to its five-year average P/S ratio of 2.2x. Although the company’s 2025 forecasts suggest a need for a lower valuation, the current price-to-sales ratio could be excessively depressed. This pullback might represent a compelling entry point for long-term investors seeking substantial future returns.

Peer Comparisons

While FMC stock seems undervalued currently, exploring how FMC’s peers perform on critical metrics could offer further insights. Valuable comparisons for companies spanning various industries can be found at Peer Comparisons.

[1] Returns as of 2/10/2025
[2] Cumulative total returns since the end of 2016

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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.