Earnings Miss: FMC Corporation Missed EPS By 20% And Analysts Are Revising Their Forecasts

Shareholders might have noticed that FMC Corporation (NYSE:FMC) filed its annual result this time last week. The early response was not positive, with shares down 2.5% to US$108 in the past week. It looks like a pretty bad result, all things considered. Although revenues of US$4.7b were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 20% to hit US$4.22 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

View our latest analysis for FMC

Taking into account the latest results, the consensus forecast from FMC's 20 analysts is for revenues of US$5.00b in 2021, which would reflect a reasonable 6.6% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 62% to US$7.10. In the lead-up to this report, the analysts had been modelling revenues of US$5.00b and earnings per share (EPS) of US$7.14 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$133, showing that the business is executing well and in line with expectations. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values FMC at US$150 per share, while the most bearish prices it at US$110. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that FMC's revenue growth is expected to slow, with forecast 6.6% increase next year well below the historical 15%p.a. growth over the last five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.3% next year. So it's pretty clear that, while FMC's revenue growth is expected to slow, it's expected to grow roughly in line with the industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple FMC analysts - going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 3 warning signs for FMC that we have uncovered.

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