Fertilizer company FMC saw its share prices decline throughout 2025, but there is another agricultural stock that has generated positive gains.
Farm machinery maker Deere is up about 11% so far this year despite unfavorable macroeconomic conditions in the agricultural sector.
While FMC’s future is highly uncertain, Deere may have a path to higher prices based on its pivot toward selling AI-enabled services to its customers.
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It is an understatement to say that investors are in FMC(NYSE: FMC) We have had a difficult year. So far this year, shares of the fertilizer and agricultural chemicals company have fallen nearly 73%. In comparison, the S&P 500 index is up almost 17%.
FMC’s significant declines are mainly due to weak results, along with the company’s decision to reduce its quarterly dividend from $0.48 per share to $0.08 per share. Worse yet, it’s not like the dust has completely settled. Uncertainty about the company’s future remains high, raising questions about whether it is time to buy the dip.
In contrast, there is another agricultural stock that has not only performed much better than FMC, but may be on track to generate steady, strong gains in the coming years as it capitalizes on advances in artificial intelligence (AI) to produce an entirely new income stream. The “other agricultural stock” I am referring to is Deere and company.(NYSE: DE).
Image source: Getty Images.
In some cases, buying on weakness can be a profitable strategy. In other cases, it can be like trying to catch a falling knife. This year, FMC has been a clear example of this. Investors who bought at $30 to $40 a share after the stock’s initial drop last winter suffered big losses when the stock fell again in October following news of the dividend cut.
That event resulted in the stock dropping from $30 to just $12.17 per share. Currently, FMC is trading modestly above its lows, but don’t assume it’s all uphill from here. Recently, Barclays Analyst Benjamin Theurer downgraded the stock, citing the prospect of further market share losses and pressure on margins. Theurer also noted that the downgrade of FMC’s credit rating could complicate restructuring efforts.
Yes, FMC’s future valuation reflects this high uncertainty. The stock currently trades at a forward price-to-earnings (P/E) multiple of just 6. That’s well below the valuation of similar ag input stocks, such as CF Industries and The Mosaic Co. Both names are also currently trading at discount forward valuations.
Additionally, until positive news emerges, it may be best to assume that subsequent events will continue to weigh on the stock. For example, if management or analysts back off expectations for 2026 further, this may result in a further pullback for FMC.
Unlike FMC, Deere recorded much more stable price behavior. Shares are up 11% so far this year. Although this stock experienced some volatility, pulling back in recent months due to challenges in the agricultural sector, it has shown resilience compared to what FMC experienced.
Better yet, while Deere’s 11% 2025 earnings lagged the S&P 500A period of much stronger share price performance could be on the horizon. For years, the company has focused on selling recurring technology-based services.
By further expanding this business, Deere aims to establish a strong, recurring revenue stream for the company. Coupled with improving macroeconomic conditions in the agricultural sector, this could pave the way for Deere to meet its growth and margin targets for 2026 to 2030.
Management is targeting annualized sales growth of 10% and operating margins of 20%. Recently, operating margins have averaged around 17%. Wall Street is skeptical of these plans, but this may benefit the investor.
Deere stock may look expensive right now at 28 times forward earnings. Competitors like it CNH Industrial and Bull trade at much lower forward P/E ratios. Still, if Deere’s technological pivot is successful, it’s possible this stock could not only maintain its valuation but also increase it.
Considering Deere’s growth strategy, analyst estimates call for the company’s earnings per share (EPS) to grow 49% between the fiscal years ending October 2026 and October 2028 or more than 14% on an annualized basis.
Effective profit growth could be even higher, depending on how quickly the aforementioned macroeconomic challenges in agriculture disappear. Let’s also consider Deere’s dividend. It may only have a forward dividend yield of 1.38%, but it has been growing steadily over the past few years.
Add it all up, and there’s a lot to suggest strong total returns ahead for this stock. So, if you are bullish on the sector, skip FMC and make Deere your best option.
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has posts on and recommends Deere & Company. The Motley Fool recommends Barclays Plc and Toro. The Motley Fool has a disclosure policy.
Forget FMC: Instead, Buy This Unstoppable Ag Titan That’s Up 11% in 2025 and Still Running Originally Posted by The Motley Fool
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