The Rising Influence of Rising Affluence

[DewDiligence]

FMC better value than CTVA, says Barron’s:

https://www.barrons.com/articles/dowdupont-spinoff-corteva-is-a-new-agriculture-stock-fmc-stock-is-safer-51558744833

Corteva is trading at a big discount to past agricultural chemical multiples. In 2016, for example, Monsanto agreed to be bought by Bayer for 20 times Ebitda. Syngenta was purchased by China National Chemical for 19 times Ebitda.

Bayer’s current legal woes involving Monsanto are a major reason agricultural valuations won’t return to 2016 levels soon.

…Corteva never produced glyphosate, but sells a generic version to farmers. Corteva’s soon-to-be-CEO, Jim Collins, told investors at a recent conference that he expected the spotlight on glyphosate to have a limited impact on Corteva’s business.

All the same, FMC look like the safer bet right now. FMC doesn’t make or sell glyphosate-based weed killers.

And FMC is less exposed to the U.S. market currently being buffeted by the Midwestern flooding. It generates about 25% of sales in North America, compared with 50% for Corteva. About 25% of FMC’s sales are in Latin America. Brazil and Argentina are among the largest exporters of grains and pulses.

… If you are looking to reap a return on a future upturn in farming, FMC is the simpler, less risky [Than CTVA] play. It gives exposure to the agricultural business at a time when earnings are depressed.

FMC has been mentioned on this sporadically; it’s a considerably more focused company following the 2018 spin-off of LTHM (#msg-144054667) and the 2017 asset swap with Dupont (#msg-130054387).