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What's in the Offing for FMC Corp (FMC) in Q3 Earnings?

FMC Corporation FMC will release its third-quarter 2017 results after the bell on Nov 6.
 
The chemical maker’s adjusted earnings of 48 cents per share for second-quarter 2017 narrowly surpassed the Zacks Consensus Estimate of 47 cents. Revenues rose roughly 7% year over year to $657 million in the quarter and beat the Zacks Consensus Estimate of $612 million.
 
The company beat the Zacks Consensus Estimate in two of the trailing four quarters while missing in the other two, delivering an average negative surprise of 1.7%.
 
FMC Corp.’s shares have rallied 80.4% over a year outperforming the 36.4% gain of the industry it belongs to.
 
 
Let’s see how things are shaping up for this announcement.
 
Factors to Consider
 
FMC Corp., during second-quarter earnings call, announced that it now sees adjusted earnings in the band of $2.30-$2.50 per share for 2017, down from prior view of $2.20-$2.60. 
 
The company expects earnings for its Agricultural Solutions unit to be in the range of $100-$120 million for the third quarter, reflecting an increase of around 22% at the mid-point compared with the prior-year quarter. For the Lithium unit, FMC Corp. expects earnings in the third quarter to be in the range of $30-$35 million, reflecting an increase of around 85% at the mid-point compared with the prior-year quarter.
 
Net sales for FMC Corp.’s Agricultural Solutions segment for the third quarter is estimated to remain flat from the second quarter as the Zacks Consensus Estimate for the third quarter is pegged at $583 million. Segment income is expected to increase 15.6% sequentially as the Zacks Consensus Estimate is $111 million for the third quarter. 
 
Moreover, the Zacks Consensus Estimate for net sales for the Lithium unit is projected to be $103 million for the third quarter, reflecting an estimated 39.2% rise on a sequential basis. Segment income is also expected to surge 42.3% sequentially as the Zacks Consensus Estimate is $34.4 million for the third quarter. 
 
FMC Corp. is benefiting from its strategic investments, acquisitions and efforts to expand its market position and strengthen its portfolio. The company is investing in technologies in its agriculture business and launching products to help farmers.
 
FMC Corp. is also witnessing strong momentum in its Lithium unit. The company is expanding its lithium hydroxide production capacity. The move is aimed at addressing the growing demand for electric vehicles. The company expects its lithium business to deliver robust earnings growth in 2017.
 
FMC Corp. recently closed two pending transactions with DuPont post satisfying all necessary conditions and approvals. Under the deal, FMC Corp. has acquired a portion of DuPont's Crop Protection business which the latter had to divest to comply with the European Commission’s ruling relating to DuPont’s merger with The Dow Chemical Company. The merger was completed on Aug 31, 2017 and created a new company named DowDuPont.  Moreover, FMC Corp. has completed the sale of its Health and Nutrition business to DuPont.

FMC Corporation Price and EPS Surprise
 
Our proven model does not conclusively show that FMC Corp. is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP  and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
 
Zacks ESP: The Earnings ESP for FMC Corp. is 0.00% as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 63 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
 
Zacks Rank: FMC Corp. currently sports a Zacks Rank #1. Though a Zacks Rank #1 increases the predictive power of ESP, the company’s ESP of 0.00% makes surprise prediction difficult.
 
We caution against Sell-rated (Zacks Rank #4 or 5) stocks going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
 
Stocks to Consider
 
Here are some companies in the basic materials space you can consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
 
Westlake Chemical Corporation WLK has an Earnings ESP of +1.08% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
 
Southern Copper Corporation SCCO has an Earnings ESP of +4% and flaunts a Zacks Rank #1.
 
Versum Materials Inc. VSM has an Earnings ESP of +9.47% and carries a Zacks Rank #3.
 
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FMC Corporation (FMC): Free Stock Analysis Report
 
Westlake Chemical Corporation (WLK): Free Stock Analysis Report
 
Versum Materials Inc. (VSM): Free Stock Analysis Report
 
Southern Copper Corporation (SCCO): Free Stock Analysis Report
 
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