Why FMC Corporation Stock Crashed After Earnings
Key Points
FMC beat on earnings but missed badly on sales last night.
Revenue was cut in half due to reorganization moves preparatory to selling FMC's India business.
FMC lowered its full-year forecast across the board, predicting negative free cash flow for the year.
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FMC Corporation (NYSE: FMC) stock collapsed Thursday morning, falling 44% through 10:20 a.m. ET after delivering a small earnings beat -- and a gigantic sales miss.
Heading into the agricultural chemicals company's Q3 report, analysts forecast earnings of $0.86 per share on sales of more than $1 billion. In fact, FMC did barely half that volume of sales, with revenue a shockingly low $542 million. Non-GAAP (adjusted) earnings were $0.89 per share.
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FMC Q3 earnings
FMC management wasted no time addressing the elephant in the room. Revenue dropped 49% year over year because of "significant one-time commercial actions taken in India to position the business for sale." FMC said that without these, its revenue would have been $961 million and down only 10% year over year.
Still, FMC's moves in India had a devastating effect on FMC's profit-and-loss statement. While FMC reported an adjusted profit -- and, indeed, a stronger profit than Wall Street was looking for by that metric -- when calculated according to generally accepted accounting principles (GAAP) FMC's result for the quarter was a hideous $4.52-per-share loss.
Is FMC stock a sell?
FMC appears to have delivered a "kitchen sink" report in which it puts all the bad news in one big blow so as to look correspondingly better (by contrast) in future years. That doesn't change the fact that 2025 is going to look really ugly before all's said and done.
FMC lowered its 2025 revenue forecast to between $3.9 billion and $4 billion, down 7% at the midpoint; lowered its non-GAAP earnings range to between $2.92 and $3.14; and said free cash flow will be negative -- perhaps by as much as $200 million.
For the time being at least, FMC stock looks unbuyable.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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