If you’ve been to a grocery store lately, then you know prices are up. Retail grocer, The Kroger Co. (KR), recently warned that prices are going to go even higher. They blame theft rings, rising shipping costs, and inflation. The last two are birds of the same feather.
Perhaps agricultural price trends are one of the reasons a trio of FMC Corporation (FMC) insiders recently bought shares. Chief Executive Officer (CEO) Douglas Mark, Chief Financial Officer (CFO) Andrew Sandifer, and Carol Anthony Davidson purchased a combined 3,860 shares, totaling $362,642. (2)
FMC company develops, markets, and sells crop protection chemicals that include insecticides, herbicides, and fungicides that are used in agriculture to enhance crop yield and quality by controlling a range of insects, weeds, and disease, as well as in non-agricultural markets for pest control. It also offers biologicals products, such as bionematicides under the Quartzo and Presence names.
FMC’s insider history is heavily lopsided toward selling. For the last 20 years, insiders have sold more than $307 million of the crop protection stock while buying a little more than $3.6 million. CEO Mark and CFO Sandifer have done nothing but sell prior to their recent acquisitions.
The Chief Executive Officer sold more than $12 million worth of the basic materials company’s stock since 2016. There was one buy prior to last week’s purchase, but the previous purchase was matched by an even larger sell on the same day. Our educated guess is that the transaction was options related. Nonetheless, this is the first standalone bullish position the CEO has taken on FMC Company. (3) Meanwhile, CFO Sandifer had two prior sells for a combined $599,431 before his early September outlay of $122,182. (4)
Timing indicates the trio could be value shopping. FMC shares got slammed after reporting second quarter earnings that were in line with Wall Street’s expectations. The stock price immediately moved aggressively lower following the quarterly financial checkup, falling roughly $20 ($106.78 to $87.27) from the close on August 3rd to the intraday low on August 23rd. The stock trades at $97.64 as we type.
New shareholders might find value in owning FMC Corporation at today’s level as Wall Street currently has a one-year price target of $122.89. (5) That’s potential upside to target of 25.86%, not including the annual dividend yield of 1.95%, putting the total possible return closer to 28%.
The one-year price target could prove to be a touch light based on analysts’ consensus earning expectations for FMC. The street forecast earnings per share (EPS) of $7.68 for next year. The average price to earnings (P/E) ratio for the industry stands at 18.2. If FMC hits Wall Street’s 2022’s EPS and trades at the industry average P/E, then the stock would trade for $139.78.
At the moment, the agricultural inputs company is valued at 22.05 times its earnings. (6) If the valuation holds through 2022 and FMC hits its consensus earnings target, then the stock would trade at $169.34.
Outlook: It appears the trio of FMC Corporation (FMC) insiders see value in their stock at its current price. Based on Wall Street’s bottom-line outlook for the ag company and the average industry P/E, shares could offer shareholders and attractive potential return during the next 12-18 months with average risk.
1 – https://www.cnbc.com/2021/09/10/kroger-gets-hit-by-higher-costs-offsetting-bigger-grocery-baskets.html
2 – https://www.secform4.com/insider-trading/37785.htm
3 – https://www.secform4.com/insider-trading/1434812.htm
4 – https://www.secform4.com/insider-trading/1739998.htm
5 – https://finance.yahoo.com/quote/FMC?p=FMC
6 – https://finance.yahoo.com/quote/FMC/key-statistics?p=FMC