TSC Ratings' Updates: Netflix

We've upgraded FMC Corporation (FMC Quote), a chemical company, which provides solutions, applications, and products to various end markets worldwide, from hold to buy. This upgrade is driven by its robust revenue growth, impressive record of earnings per share growth, notable return on equity, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows low profit margins.

FMC's revenue growth has slightly outpaced the industry average of 26.8%. Since the same quarter one year prior, revenues rose by 31.0%. Growth in the company's revenue appears to have helped boost the earnings per share.

FMC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, FMC CORP increased its bottom line by earning $2.02 versus $1.83 in the prior year. This year, the market expects an improvement in earnings ($4.47 versus $2.02).

The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Chemicals industry and the overall market on the basis of return on equity, FMC CORP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500. Net operating cash flow has slightly increased to $167.70 million or 1.75% when compared to the same quarter last year. Despite an increase in cash flow, FMC CORP's cash flow growth rate is still lower than the industry average growth rate of 20.58%.

Despite currently having a low debt-to-equity ratio of 0.50, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.07 is sturdy.