Why FMC Stock Keeps Dropping

FMC (NYSE: FMC) stock had a terrible October, as its stock crashed last week in the wake of a gigantic Q3 sales miss.

Things aren't looking much better in early November for this agricultural chemicals company, either. Wall Street analysts are continuing to line up to bash FMC stock, and in Monday trading, 11:10 a.m. ET, FMC shares are down another 4.8%.

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What's ailing FMC stock?

FMC reported a 49% drop in revenue in Q3, to $542 million, after taking "significant one-time commercial actions ... in India to position the business for sale." Generally accepted accounting principles (GAAP) losses for the quarter surged to $4.52 per share. Ratings-watcher The Fly reports that a half-dozen analysts downgraded the stock last week.

This morning, two more analysts cut price targets, with Morgan Stanley reducing FMC to a $17 target, and Goldman Sachs cutting only a little less -- to $19. And why?

Goldman cites FMC's "unfortunate" decision to cut its dividend by 86%. Instead of paying investors $0.50 per share as in quarters past, the company's next quarterly dividend will pay a mere $0.08. GS also warns FMC faces stiff competition from "generic" agricultural chemicals in Latin America, creating pricing pressure -- and hurting profits.

Morgan Stanley calls the situation "challenging" and is cutting its earnings forecast to 8% less than what everyone else on Wall Street is guessing.

Is FMC stock a buy?

How bad do things look for FMC? After Q3's miserable result, a loss for 2025 seems inevitable. Still, most analysts see the company earning $2.41 per share next year. Even if earnings fall 8% below that, we're still looking at maybe $2.21 per share.

For a stock costing $14.60 or so, that's only a 6.6x P/E ratio. However, if you factor in FMC's $4.2 billion in net debt, the debt-adjusted P/E is closer to 13x.

That's too high a price to pay for troubled FMC.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group. The Motley Fool has a disclosure policy.