Key Points

FMC beat on earnings in Q1, but warned of an upcoming Q2 miss. Second-half growth could be "substantial" -- or earnings could end up mostly flat against next year.

FMC (NYSE: FMC) stock tumbled 6.5% through 10:55 a.m. ET this morning, despite soundly beating earnings expectations last night.

Heading into the quarterly report, analysts expected FMC to earn $0.09 per share, adjusted for one-time items, on $784 million in revenue. In fact, FMC earned twice what it was "supposed to" -- $0.18 per share, and its sales came in at a strong $791.4 million.

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FMC Q1 earnings

But it's hard to call FMC's news "good." While sales were better than expected, they still declined 14% year over year. Arguably worse, while adjusted profits were twice what analysts expected, FMC reported that its earnings as calculated according to generally accepted accounting principles (GAAP) were a loss of $0.12 per share, and down significantly from last year as well.

CEO Pierre Brondeau blamed price declines of 9% on FMC's agricultural chemicals for the miss, and noted that the volume of product shipped also declined 1% -- even when compared to "a weak prior year."

Is FMC stock a sell?

The good news is that Brondeau is predicting FMC will "deliver substantial growth in the second half" after a weak Q1. The bad news is that, when it comes to hard numbers, the CEO says revenue will likely grow about 3%, "excluding the impact of the Global Specialty Solutions (GSS) business divestiture," with earnings likely flat against last year, falling in a range between $3.26 and $3.70 per share, adjusted for one-time items.

The bad news is that in Q2 in particular, where FMC's visibility is presumably greater, management is forecasting no more than $0.68 per share (and potentially as little as $0.52) versus analyst forecasts of $0.75 per share. That's a big miss coming down the pike, and it's understandable that investors are leery of waiting around another three months just to see back-to-back misses.

Should you invest $1,000 in FMC right now?

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Why FMC Stock Dropped Today was originally published by The Motley Fool

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