FMC gets Wednesday's nod as the IBD Growth Stocks To Watch pick as it breaks out of a base following a positive earnings report and announcement of a new share repurchase program.
The Philadelphia-based agricultural chemicals company makes pesticides, herbicides and fungicides for the agricultural, industrial and consumer markets around the globe.
FMC stock broke out of a cup-with-handle base Wednesday, clearing a buy point of 114.61, according to MarketSmith chart analysis. The stock jumped 6.8% to 118.79. The buy zone goes up to 120.34.
The growth stock's relative strength line is in a steep uptrend, which indicates strong outperformance of the S&P 500.
Record Earnings
The company reported record fourth-quarter results Tuesday. Earnings per share shot up 52% to $2.16 vs. $1.42 a year earlier. In addition, FMC's earnings growth has accelerated, from a decline of 17% and increases of 5% and 17% in the prior three periods. Q4 sales growth also accelerated, revving up to a 23% increase in the latest period, to $1.41 billion. In Q3, the top line rose 10%.
An 81% jump in North American revenue was driven by a combination of strong selective herbicide volumes, higher prices, new products and continued market expansion of Rynaxypyr and Cyazypyr active ingredients, the company said.
For the full year, EPS rose 12% to $6.93. Sales climbed 8.7% to $5.05 billion.
"Our financial performance reflects the strength of our synthetic and biological portfolios, a healthy demand environment as well as accelerating price increases," said Mark Douglas, FMC president and chief executive officer. "Revenue growth was particularly robust in North America and Latin America. FMC delivered results above the midpoint of our guidance in spite of elevated input costs, FX (foreign exchange) headwinds and challenges with raw material availability impacting the company and the broader industry."
Growth Stocks To Watch: Outlook
For Q1, FMC expects revenue in the range of $1.22 billion to $1.34 billion. The midpoint of that range would be 7% higher than a year earlier. It sees adjusted EPS in a range of $1.50 to $1.90, an 11% increase at the $1.70 midpoint.
For all of this year, FMC expects adjusted diluted EPS in the range of $6.80 to $8.10, an 8% increase at the $7.45 midpoint.
"Looking ahead to 2022, we anticipate strong commodity prices will continue to drive demand for our differentiated product portfolio," Douglas said. "We expect raw material, logistics and packaging input costs to remain at elevated levels and potentially inflate further. FX volatility is a growing challenge in some of the countries where we operate. FMC will continue to strive to mitigate these headwinds through volume growth, strong pricing actions and proactive cost discipline," Douglas said.
$1 Billion Share Buyback Authorized
The board of directors authorized a new $1 billion share repurchase program. The company said this confirms confidence in its ability to sustainably generate strong cash flow in 2022 and beyond. "This further confirms the company's commitment to return to shareholders cash in excess of that needed to support growth of the business," it said.
The company said it expects to repurchase $500 million to $600 million of FMC shares this year. That would be on top of the $100 million repurchases in Q4 last year and $400 million for the full year 2021.
Wall Street's View
The consensus of analysts tracked by FactSet is that FMC's Q1 earnings will rise 14% to $1.75 a share on an 8% sales increase to $1.3 billion. For the full year, Wall Street pegs EPS at $7.72, up 11% on sales of $5.35 billion, up 6%.
Stock Checkup Rank For This Growth Stocks To Watch Pick
FMC ranks No. 6 in its agricultural chemicals group, according to Stock Checkup. The group itself sits at No. 9 out of IBD's 197 industry groups ranked by stock price performance. The group was ranked No. 9 three weeks ago too, and has climbed from No. 15 six weeks ago. Groups ranked above 40 often have IBD 50 growth stocks to watch and buy in them.
Other growth stocks ranked highly in the group include CF Industries, Mosaic, Nutrien and Intrepid Potash.
CF Industries is also on the Leaderboard, IBD 50 and Stock Spotlight lists.
Mosaic and Nutrien are on the IBD 50 and Stock Spotlight.
