With a daily loss of -8.64% and a 3-month loss of -43.81%, FMC Corp's (FMC, Financial) current stock performance raises an important question: is the stock significantly undervalued? The company's Earnings Per Share (EPS) stands at 4.91, providing a critical clue to the puzzle. This article provides a valuation analysis of FMC Corp, offering insights into its intrinsic value and future prospects.
Company Overview
FMC Corp is a renowned crop chemical company with a diversified sales portfolio across various geographies and crops. Through strategic acquisitions, FMC Corp has become one of the top five patented crop chemical companies. The company continues to innovate and develop new products, particularly biologicals, through its research and development pipeline. Despite its current stock price of $52.96, the company's GF Value, an estimate of fair value, stands at $115.26, suggesting a significant undervaluation.
Understanding GF Value
The GF Value is a proprietary measure that represents the intrinsic value of a stock. The GF Value Line, visible on our summary page, provides an overview of the fair value at which the stock should ideally be traded. This value is calculated based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates.
According to the GF Value calculation, FMC Corp appears to be significantly undervalued. The current stock price of $52.96 per share and the market cap of $6.60 billion suggest that FMC Corp's stock is trading below its fair value. As a result, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength of FMC Corp
Before investing in a company, it's crucial to assess its financial strength. Companies with poor financial strength pose a higher risk of permanent loss. FMC Corp's cash-to-debt ratio of 0.2 is worse than 73.58% of 246 companies in the Agriculture industry, indicating fair financial strength.
FMC Corp's Profitability and Growth
Investing in profitable companies, especially those with consistent profitability over the long term, is less risky. FMC Corp, with its high operating margin of 19.87%, ranks better than 84.71% of 242 companies in the Agriculture industry, indicating strong profitability.
However, growth is a critical factor in a company's valuation. The 3-year average annual revenue growth of FMC Corp is 9.5%, which ranks worse than 65.35% of 228 companies in the Agriculture industry. The 3-year average EBITDA growth rate is 12.1%, which ranks worse than 59.09% of 220 companies in the Agriculture industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) provides another measure of its profitability. FMC Corp's ROIC of 11.46 is higher than its WACC of 7.23, implying that the company is creating value for shareholders.
Conclusion
In summary, FMC Corp's stock appears to be significantly undervalued. The company's financial condition is fair, and its profitability is strong. However, its growth ranks worse than 59.09% of 220 companies in the Agriculture industry. To learn more about FMC Corp's stock, you can check out its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
