FMC Corp. (FMC)
“Headquartered in Pennsylvania, FMC Corp. (FMC) is a global seller of chemicals widely used in both agriculture and industry. In terms of revenues, the company holds the No. 1 or No. 2 position either globally or within North America for most of its product groups. Its agriculture segment...
“Headquartered in Pennsylvania, FMC Corp. (FMC) is a global seller of chemicals widely used in both agriculture and industry. In terms of revenues, the company holds the No. 1 or No. 2 position either globally or within North America for most of its product groups. Its agriculture segment produces and sells branded insecticides, herbicides, and fungicides, many based on patented technologies.
“By protecting crops— including cotton, corn, rice, grains, fruits and vegetables—these products let farmers obtain higher yields. FMC’s patented proprietary formulas, which are differentiated from competing products and thus can be sold at higher prices compared to the non-patented products, are particularly important. Last year, the agriculture group contributed roughly 40% of companywide sales but 50% of operating income thanks to favorable margins. ... FMC will benefit from the long-term uptrend in food prices, which increases demand for anything that boosts agricultural production. Food prices soared last year largely because of weather-related supply shortages. Longer term, improved living standards in developing economies and longer life expectancies around the globe should keep prices rising. We especially like FMC’s large exposure to the fast-growing Latin American and Asian Pacific regions, which together accounted for 67% of the company’s 2010 agricultural revenues. ...
“Last year, FMC’s revenues rebounded to $3.1 billion after dropping to $2.8 billion the year before. Earnings were depressed at just $173 million primarily because of abnormal charges such as a $131 million charge related to the shutdown of the company’s phosphates plant in Spain. On an adjusted basis, the company earned $354 million, amounting to $4.87 per share.
“For 2011, the company now expects adjusted earnings of $5.60 to $5.80 per share (higher than the $5.35 to $5.75 it had predicted at the year’s start) and earnings growth of at least 10% in all three segments. Adjusted earnings from continuing operations grew 11% over last year’s figures through the year’s first half, a sign of strength in FMC’s core business lines. Taking into account both organic growth and potential acquisitions, the company projects sales will hit $5 billion by 2015, with more than half generated from developing economies (compared to 43% in 2010).
“The balance sheet is strong, with just $623 million in total debt for a debt/equity ratio of 0.43 and $187 million in cash on hand as of the end of June. At current prices, shares trade at just 11 times forward earnings. With earnings growth projected to average 10% annually, the stock’s PEG ratio is just 1.1, a bargain considering FMC’s leadership position for many of its products, the relatively stable demand from its end markets, and the company’s growing presence in emerging markets.”
Stephen Leeb, PhD., The Complete Investor, 10/11