Today we’re going to take a look at the well-established FMC Corporation (NYSE:FMC). The company’s stock saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $98.17 and falling to the lows of $73.11. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether FMC’s current trading price of $76.24 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at FMC’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change. View our latest analysis for FMC
What is FMC worth?According to my valuation model, FMC seems to be fairly priced at around 11.79% below my intrinsic value, which means if you buy FMC today, you’d be paying a fair price for it. And if you believe that the stock is really worth $86.43, then there’s not much of an upside to gain from mispricing. Although, there may be an opportunity to buy in the future. This is because FMC’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company’s shares will likely fall by more than the rest of the market, providing a prime buying opportunity.
Can we expect growth from FMC?Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. In FMC’s case, its revenues over the next few years are expected to grow by 75.19%, indicating a highly optimistic future ahead. If expense does not increase by the same rate, or higher, this top line growth should lead to stronger cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? FMC’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on FMC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on FMC. You can find everything you need to know about FMC in the latest infographic research report. If you are no longer interested in FMC, you can use our free platform to see my list of over 50 other stocks with a high growth potential.