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FMC Corporation: A Stronger H2 And A Potential Surge In Buybacks Could Propel The Share

Apr. 06, 2021 10:28 AM ETFMC Corporation (FMC)3 Comments
The Alpha Sieve profile picture
The Alpha Sieve


  • FMC's geographic and product diversity lends a degree of strength to the operational model and the company's impressive discovery and development pipeline provide significant revenue visibility over the next decade.
  • Over the past three months, FMC has underperformed its peers in the material space, but the nature of FMC's current issues is relatively ephemeral.
  • There are several tailwinds in H2-21 and FMC will also look to return close to $700m to shareholders in FY21 via buybacks and dividends vs only $343m in FY20.
  • The stock is currently trading in line with its long-run valuation averages but there is scope for the multiples to expand even further, at least closer to peak levels seen last December.


The Materials sector has recently proven to be one of the shining lights in the investment world; over the past year, its alpha-generating qualities have come to the fore, delivering returns of close to 90% (performance of the flagship materials ETF - XLB), comfortably beating the benchmark index - the S&P 500 (^GSPC).

Source: Yahoo Finance

Within this materials sector, one stock- FMC Corporation (NYSE:FMC), hasn't quite enjoyed the same degree of success and has lagged both its peers and the broader markets, over the past 3 months. As pointed out in the 1-year chart above, FMC had been keeping pace with its material peers for most of the last 12 months (and even outperforming XLB at times), but sometime towards the end of last year, it began to lose steam, and in 2021, we've seen the divergence expand.

In this article, I'd like to focus on the long-term investment case of a company that is one of the top-tier players in an industry that could play a pivotal role in dealing with food security challenges across the globe. I will also touch upon the reasons for the recent underperformance of FMC (although some of this has been made up over the past month), what to look forward to, and then provide some color on the valuations and the price action.

Long-term investment case of the Agricultural Chemicals Industry and FMC

As we chug along in the 21 st century, the smorgasbord of challenges that mankind faces gather pace every day. One of the problems that perhaps does not receive the same attention as environmental disasters, or climate change, is the risk of food security, but it is becoming increasingly clear that this is a risk that is likely to snowball over the next decade or so. In fact, according to the UN World Food Programme, it

This article was written by

The Alpha Sieve profile picture
Investment research, primarily oriented towards uncelebrated/under-covered stocks and ETFs, across North America, Europe and Asia. Seeks to combine both fundamental and technical disciplines while making an investment/trading proposition.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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