Will This Downgrade Hurt FMC Corp (FMC) Today?

NEW YORK (TheStreet) -- FMC Corp  (FMC) was downgraded to" market perform" from "outperform," said Wells Fargo on Tuesday. The firm said the business split is already priced into the stock. 

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Separately, TheStreet Ratings team rates FMC CORP as a Buy with a ratings score of A-. The team has this to say about their recommendation:

"We rate FMC CORP (FMC) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FMC's revenue growth has slightly outpaced the industry average of 13.6%. Since the same quarter one year prior, revenues rose by 23.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • FMC CORP has improved earnings per share by 25.0% 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 $3.31 versus $3.20 in the prior year. This year, the market expects an improvement in earnings ($4.50 versus $3.31).
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 27.85% over the past year, a rise that has exceeded that of the S&P 500 Index. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Chemicals industry and the overall market, FMC CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for FMC CORP is currently lower than what is desirable, coming in at 34.80%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 2.39% trails that of the industry average.

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