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Agrium Poised on Retail Expansion Amid Pricing Concerns
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We issued an updated research report on Agrium Inc. on Nov 23.
The company missed earnings and sales estimates in third-quarter 2017. Agrium’s adjusted loss of 23 cents per share was wider than the Zacks Consensus Estimate of a loss of a penny. Revenues increased 8.7% year over year to $2,382 million in the reported quarter. However, it missed the Zacks Consensus Estimate of $2,519 million.
Agrium has underperformed the industry it belongs to over a year. The company’s shares have moved up around 10.9% over this period compared with roughly 15.2% gain recorded by its industry.
Agrium revised its earnings guidance for 2017 to the range of $4.65-$4.80 per share (compared with $4.75- $5.25 expected earlier). The company lowered its guidance due to lower production volumes and unfavorable weather conditions which impacted Retail operations, particularly areas impacted by hurricanes.
Agrium expects Retail EBITDA in the range of $1.16-$1.19 billion, and Retail nutrient sales volumes of 9.9-10.2 million tons in 2017. The company anticipates nitrogen production to be 3.3-3.4 million tons. Agrium's expects potash production of 2.4-2.5 million tons in 2017.
The company remains actively focused on expanding its retail business through strategic acquisitions. Agrium has acquired 38 retail locations so far in 2017 with roughly $250 million in expected annual sales. The company has a strong pipeline of potential retail acquisitions. Also, Agrium remains focused on managing costs amid a still challenging operating environment.
The proposed merger with Potash Corp. should also create $500 million in annual synergies. The companies have obtained regulatory approval in China, Canada, Russia, India and Brazil for the deal that is expected to close by the end of fourth-quarter 2017.
However, weak nutrient pricing remains a concern. Nitrogen and phosphate prices remain under pressure due to oversupply. The crop pricing environment is also expected to remain soft in the near term. Lingering impacts from hurricanes may also continue to affect crop protection sales and margin in the fourth quarter.
Ingevity has expected long-term earnings growth of 12%. Its shares have gained 37% year to date.
Koppers Holding has expected long-term earnings growth of 18%. Its shares have rallied 20.4% year to date.
Westlake Chemical has expected long-term earnings growth of 10.6%. Its shares have moved up 69.3% year to date.
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Agrium Poised on Retail Expansion Amid Pricing Concerns
Agrium Inc. Price and Consensus | Agrium Inc. Quote
Zacks Rank & Stocks to Consider
Agrium currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are Ingevity Corporation (NGVT - Free Report) , Koppers Holding Inc. (KOP - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has expected long-term earnings growth of 12%. Its shares have gained 37% year to date.
Koppers Holding has expected long-term earnings growth of 18%. Its shares have rallied 20.4% year to date.
Westlake Chemical has expected long-term earnings growth of 10.6%. Its shares have moved up 69.3% year to date.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>