FMC Earnings Miss Confirms Cash Conversion Woes, Stock Plunges

What happened

FMC Corporation's stock gapped down sharply after reporting weak Q4 2025 earnings, opening at $15.09 from a prior close of $16.99 and trading as low as $12.8570 with high volume. The DeepValue master report frames FMC as a levered turnaround where equity value hinges on near-term cash conversion from Latin America receivables, not agricultural demand. The earnings disappointment likely reflects persistent collection delays and competitive payment-term pressures, which the report highlighted as critical headwinds. This outcome pushes FMC closer to the bear scenario with a 30% probability and implied value of $12, now reflecting heightened market skepticism. Consequently, the anticipated cash flow inflection has not materialized, raising doubts about debt reduction and covenant stability.

Implication

The weak earnings validate the DeepValue report's concerns about FMC's cash conversion and leverage, indicating that operating cash flow remains negative and reliant on short-term funding. This development increases the likelihood of covenant stress, potentially forcing another relief request and aligning with the bear scenario's $12 valuation. Without swift normalization of Latin America collections, the turnaround thesis weakens, and entry opportunities should only be considered at lower prices with clear evidence of cash stabilization. Monitoring next steps, such as receivables monetization trends and India divestiture progress, is critical for any reassessment. For now, the stock offers no margin of safety and should be avoided until the 3-6 month reassessment window passes with positive signals.

Thesis delta

The investment thesis has shifted negatively as the Q4 2025 results indicate no progress on cash conversion, a core requirement for the turnaround. This increases the probability of the bear scenario and may necessitate a covenant relief request, which was a key thesis breaker in the report. Consequently, the 'WAIT' rating with an attractive entry at $14 is under review, and investors should prepare for further downside if collections do not normalize soon.