American Vanguard falls on 2Q outlook

NEW YORK (AP) -- American Vanguard's stock tumbled to its lowest point in more than a year on Tuesday as the agricultural products company cautioned that its second-quarter performance will be hurt by bad weather.

THE SPARK: American Vanguard said late Monday that recent wet weather in the Midwest and Southeast will hamper its quarterly performance. Because of this, the company said it doesn't expect to meet Wall Street's earnings and revenue expectations.

American Vanguard anticipates its quarterly revenue topping the prior-year period's $84.8 million, but said it's too early to determine what impact the unfavorable weather had on its earnings.

Analysts polled by FactSet expect earnings of 40 cents per share on revenue of $106.8 million.

American Vanguard, which is based in Newport Beach, Calif., is expected to report its second-quarter results in early August.

THE ANALYSIS: Michael Cox of PiperJaffray cut American Vanguard's stock to "Neutral" from "Overweight" and reduced its price target to $29 from $37.

In a client note, the analyst said that he is more concerned about orders potentially being delayed or not placed at all than he is about the bad weather.

Cox said that the company's cotton crop protection chemicals made up 13 percent of total sales last year. While this figure has been falling due to the strength of corn, the analyst said that the cotton segment had a record performance in 2012. Cox noted that American Vanguard's cotton insecticide and defoliant products are dependent on acreage planted, with the U.S. Department of Agriculture forecasting a double-digit decline in cotton acreage since early February. Cox believes a drop-off of this magnitude would be tough for the company to overcome.

While American Vanguard is doing well with its corn crop protection chemicals, Cox said that the company will need to turn to new products in the near future to try to keep the momentum going.

A representative for the company did not immediately respond to an email seeking comment.

SHARE ACTION: Shares of American Vanguard Corp. dropped $4.21, or 15.3 percent, to $23.33 in afternoon trading. The stock fell to $22.81 earlier in the session, the lowest point since April 2012.