Key Points
FMC Corporation stock got crushed by an earnings miss last month.
Corteva just had the same thing happen to it -- and for the same reason.
Guidance for the rest of this year is a bit vague, and probably not great news for investors.
Indianapolis-based fertilizer and crop protection company Corteva (NYSE:CTVA) saw its stock thrown for a loop Thursday. Shares of Corteva sank 20.2% through 12:15 p.m. ET Thursday after missing badly on earnings last night.
Analysts had expected Corteva to earn $0.10 per share in Q3 on sales of nearly $1.8 billion. Instead, Corteva reported just $0.06 per share in profit, and sales below $1.6 billion.
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Corteva Q3 earnings
What went wrong with Corteva last quarter? It honestly sounds a lot like what rival FMC Corporation (NYSE:FMC) warned us about last month: "rapid market price declines" in agricultural chemicals. Corteva says it experienced price pressure in both North and South America.
Revenue fell 9% year over year on only a 2% reduction in volumes sold. Prices declined 7%, explaining the difference.
Region by region, Corteva managed to grow its revenue in North America, Europe, and Asia, but its Latin American sales plunged 28% year over year.
What's next for Corteva
Things could get worse before they get better. Despite saying that demand for its products remains strong, Corteva now expects "challenging" market conditions, "particularly in Brazil," to weigh on the agricultural chemicals market "significantly" more than previously anticipated.
Management says it still expects to earn between $0.76 and $0.80 per share for the year, but this is only true for a very specific flavor of profits: "adjusted pro forma operating" earnings. That doesn't sound like a very GAAP number -- and it probably isn't. Meanwhile, Wall Street analysts are still looking for Corteva to earn $0.82 per share on a GAAP basis, according to data from S&P Global Market Intelligence.
I think they're going to be disappointed -- and investors already are.
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.