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Does FMC Technologies Have More Room to Run?

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FMC Technologies versus industry ETF

FMC Technologies (FTI) is one of the most well-known US oilfield equipment and service (or OFS) providers in the US. Its share has decreased in the stock market in the past year.

On August 30, 2016, FMC Technologies was trading at $28.25. This was ~3% lower than its price at the beginning of this year.

The VanEck Vectors Oil Services ETF (OIH), an ETF tracking index of 25 OFS companies, has increased by 6% during the same period. Oil States International (OIS), FTI’s similar market cap peer, has increased by 12% since January 1, 2016.

Compared to FTI’s ~$6.4 billion market capitalization, OIS’s market capitalization stands at ~$1.6 billion. FTI comprises 4.8% of OIH. 

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What does FMC Technologies’s share price movement tell us?

In the past year, FMC Technologies’s (FTI) share price rose until November 2015. It fell sharply in February 2016. Its share price has been relatively resilient since then.

FTI’s net income has continued to fall in the past four quarters. Quarter-over-quarter, the decline in its net income accelerated in 2Q16. Its revenue, on the other hand, was relatively resilient, compared to some its oilfield services industry peers.

FTI’s share price has underperformed crude oil prices in 2016. Crude oil prices have recovered by 26% since the beginning of 2016.

FTI’s moving averages

On August 30, FMC Technologies’s share price was at a 6% premium to its 50-day moving average (or DMA). It is trading 3% above its 200-day moving average.

Moving averages exhibit a smoother trend following the stock’s price movement. A 50 DMA is a short-term MA, while a 200 DMA shows a long-term trend. FTI’s stock price stayed above its short-run MA in August. The short-run MA has, however, been consistently below the long-run MA.

Although FTI’s share price is gathering some momentum, it’s weighed down by long-term bearishness. On May 19, FTI announced its proposed merger with European OFS giant Technip. However, FTI’s share price has not rallied following the merger news. You can read more about the proposed merger in FMC Technologies and Technip to Form Energy Services Giant.

Next, we’ll discuss what FTI’s management thinks about its outlook.

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