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FMC Corporation (FMC) Is Today's Roof Leaker Stock

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified FMC Corporation ( FMC) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified FMC Corporation as such a stock due to the following factors:

  • FMC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $56.8 million.
  • FMC has traded 221,928 shares today.
  • FMC is trading at 2.33 times the normal volume for the stock at this time of day.
  • FMC crossed below its 200-day simple moving average.

'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.

EXCLUSIVE OFFER: Get the inside scoop on opportunities in FMC with the Ticky from Trade-Ideas. See the FREE profile for FMC NOW at Trade-Ideas

More details on FMC:

FMC Corporation, a diversified chemical company, provides solutions and products for agricultural, consumer, and industrial markets. It operates in three segments: Agricultural Products, Specialty Chemicals, and Industrial Chemicals. The stock currently has a dividend yield of 0.8%. FMC has a PE ratio of 21.8. Currently there are 8 analysts that rate FMC Corporation a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for FMC Corporation has been 741,500 shares per day over the past 30 days. FMC has a market cap of $9.2 billion and is part of the basic materials sector and chemicals industry. Shares are down 7.9% year-to-date as of the close of trading on Tuesday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates FMC Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • FMC's revenue growth has slightly outpaced the industry average of 8.6%. Since the same quarter one year prior, revenues rose by 16.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Chemicals industry and the overall market, FMC CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $116.10 million or 35.63% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.03%.
  • FMC CORP's earnings per share declined by 24.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FMC CORP increased its bottom line by earning $3.24 versus $2.77 in the prior year. This year, the market expects an improvement in earnings ($3.80 versus $3.24).
  • 35.59% is the gross profit margin for FMC CORP which we consider to be strong. Regardless of FMC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.86% trails the industry average.

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