NEW YORK (TheStreet) -- FMC (FMC - Get Report) shares are up 2.14% to $59.07 in trading on Tuesday as the company is close to selling its soda ash unit to chemical maker Tronox (TROX) for more than $1.5 billion, according to the Wall Street Journal.
An announcement of the deal is expected sometime today, the Journal said.
Exclusive Report: Jim Cramer's Best Stocks for 2015
Philadelphia, PA-based chemical maker FMC announced its intention to sell its alkali chemicals business in September, saying that the sale of the unit would allow it to cut its debt following its $1.8 billion acquisition of Cheminova A/S.
FMC's unit makes soda ash, whose demand has suffered due to "an uneven global economic recovery," according to Reuters.
TheStreet Ratings team rates FMC CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FMC CORP (FMC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, weak operating cash flow and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- FMC's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 6.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Chemicals industry. The net income increased by 214.5% when compared to the same quarter one year prior, rising from $17.90 million to $56.30 million.
- 35.04% 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 5.54% trails the industry average.
- The debt-to-equity ratio of 1.01 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, FMC maintains a poor quick ratio of 0.97, which illustrates the inability to avoid short-term cash problems.
- Net operating cash flow has decreased to $86.60 million or 25.40% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, FMC CORP has marginally lower results.
- You can view the full analysis from the report here: FMC Ratings Report