FMC: A Most Peculiar Dip

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Shares of FMC Corporation (FMC 19.89%), purveyors of agricultural chemicals – a business, one might observe, predicated on the rather optimistic assumption that plants will continue to grow – experienced a rather significant downward adjustment on Thursday, falling a full 20.7% by approximately 13:00 Eastern Standard Time. This, as a matter of historical context, essentially reversed all the gains made year-to-date, following a rather more dramatic 71.5% decline in the previous year. It’s the sort of statistical anomaly that makes you wonder if someone, somewhere, is playing with the universe’s dial. (One suspects the universe has far more interesting things to do.)

Last night, FMC released its fourth-quarter earnings, which, let’s say, didn’t exactly set the fields ablaze. Furthermore, management announced they were exploring “strategic options,” which, translated from corporate-speak, generally means “we’re considering whether or not to sell the entire thing.” It’s a bit like deciding to dismantle a perfectly good spaceship, but then again, “perfectly good” is a relative term, isn’t it?

Normally, an announcement of this nature might cause a stock to rise, fuelled by the speculation of a lucrative buyout. However, in this instance, it appeared to signal that management might be waving a white flag, or perhaps a slightly wilted green one. It suggests a distinct lack of faith in the immediate future, which, considering the complexities of modern agriculture, is hardly surprising. (Imagine trying to predict the whims of a particularly stubborn tomato plant.)

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FMC Disappoints (Again), and Forecasts More of the Same

The fourth-quarter results revealed revenue of $1.08 billion – a 12% decrease and a miss of expectations. Adjusted earnings per share clocked in at $1.20, down 33% year-over-year, which, while meeting expectations, hardly constitutes a cause for celebration. It’s the financial equivalent of a lukewarm cup of tea.

FMC continues to navigate a rather challenging agricultural downcycle, hampered by an oversupply of chemicals and depressingly low margins for growers. Adding to the woes, much of FMC’s chemical portfolio has come off-patent, forcing them to lower prices – a situation not unlike trying to sell umbrellas during a drought. (And then, of course, there’s the $4.07 billion in debt, which is 5.8 times their projected $700 million EBITDA for 2026. A ratio that, shall we say, isn’t exactly reassuring.)

Preliminary guidance for 2026 isn’t much brighter, predicting another 5% revenue decline to $3.7 billion, a 17% drop in adjusted EBITDA to $700 million, and a rather substantial 41% decrease in adjusted EPS to $1.76. Management’s plan to address this involves paying down debt through asset sales – including their Indian business – and licensing out some of their chemicals. It’s a bit like trying to bail out a sinking ship with a teaspoon, but one must admire the tenacity.

FMC Sends Mixed Signals Amidst Strategic Review

FMC’s management did attempt to offer a glimmer of hope, suggesting that their on-patent chemicals should experience healthy growth in the future. They forecast sales of $300 to $400 million for these new chemicals in 2026, rising to $800 million by 2028, $1 billion by 2030, and a rather ambitious $2 billion by 2035. (One can’t help but wonder if these projections are based on actual data, or simply a particularly optimistic spreadsheet.)

However, it seems rather peculiar that they’d be willing to entertain selling the company before these new products have a chance to deliver on their promise. The stock is down 88% from its all-time high, and currently trades at a mere 7.7 times this year’s lowered EPS forecast. It’s the financial equivalent of offering a priceless artifact at a garage sale. (Though, admittedly, defining “priceless” is a surprisingly complex philosophical exercise.)

Therefore, one is left pondering why they’d be willing to sell at what appears to be a low point, if these new chemicals are indeed poised to take off as projected. Nevertheless, FMC’s bargain-basement valuation and the potential for a sale could make it an attractive, albeit speculative, buy for high-risk traders. For long-term investors, however, this whole story still appears rather risky. It’s a situation that demands careful consideration, a strong stomach, and perhaps a very large pot of tea.

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2026-02-05 21:52