A month has gone by since the last earnings report for Potash Corporation of Saskatchewan Inc. . Shares have lost about 7.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Potash Corp. Misses Q4 Earnings, Revenue Estimates
Potash Corp. posted a profit of $59 million or $0.07 per share in fourth-quarter 2016, declining roughly 70.6% from $201 million or $0.24 per share it earned a year ago. Earnings per share for the reported quarter missed the Zacks Consensus Estimate of $0.09.
Net sales for the quarter declined 25.5% year over year to $928 million and missed the Zacks Consensus Estimate of $1,028 million.
Segment Review
Potash: Potash gross margin was $120 million in the reported quarter, down from $183 million in the year-ago period due to lower-price environment. Sales volumes for the segment were 2.2 million tons, up 27% year over year. Average realized potash price was $157 per ton, down from the $238 per ton figure recorded in the year-ago quarter. This decline is attributed to the fall in spot prices witnessed in the first half of 2016 and lower contract prices settled in the second half.
Nitrogen: Gross margin was $55 million in the reported quarter, down from $142 million in the year-ago quarter due to weaker prices. Sales volumes for the quarter were 1.6 million tons, modestly higher than the year-ago recorded figure, mainly due to stronger demand for nitrogen solutions relative to ammonia. Average realized price of $182 per ton during the quarter was down considerably from the $288 per ton achieved in the year-ago quarter. The decline was due to the result of lower global energy costs and increased supply of nitrogen products.
Phosphate: Sales volumes declined to 0.7 million tons from the year-ago figure of 0.8 million tons due to weaker demand for feed and industrial products. Gross margin of $8 million for the quarter was significantly lower than the 2015 level. Average realized phosphate price for the quarter was $404 per ton, down from $522 per ton recorded in the year-ago period, owing to weaker fertilizer realizations.
Financials
Potash Corp.’s cash and cash equivalents were $32 million as of Dec 31, 2016, compared with $91 million as of Dec 31, 2015. As of Dec 31, 2016, long-term debt was $3,707 million compared with the year-age figure of $3,710 million.
Guidance
Potash Corp. expects full-year 2017 earnings to be in the range of $0.35 to $0.55 per share that includes merger related charges of $0.05 per share. The company expects total potash sales volume to be in the range of 8.7–9.4 million tons in 2017. It projects potash gross margin of $550-$800 million for the year.
Capital expenditures for the year are projected at $600 million.
Potash Corp. expects combined gross margin for nitrogen and phosphate in the band of $150–$400 million for 2017.
The company expects effective income tax rate in the range of 17–20% and selling and administrative expenses in the range of $225 million–$235 million for 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted by 9.47% due to these changes.
VGM Scores
At this time, Potash Corp's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of this revision looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
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Why Is Potash Corp (POT) Down 7.2% Since the Last Earnings Report?
A month has gone by since the last earnings report for Potash Corporation of Saskatchewan Inc. . Shares have lost about 7.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Potash Corp. Misses Q4 Earnings, Revenue Estimates
Potash Corp. posted a profit of $59 million or $0.07 per share in fourth-quarter 2016, declining roughly 70.6% from $201 million or $0.24 per share it earned a year ago. Earnings per share for the reported quarter missed the Zacks Consensus Estimate of $0.09.
Net sales for the quarter declined 25.5% year over year to $928 million and missed the Zacks Consensus Estimate of $1,028 million.
Segment Review
Potash: Potash gross margin was $120 million in the reported quarter, down from $183 million in the year-ago period due to lower-price environment. Sales volumes for the segment were 2.2 million tons, up 27% year over year. Average realized potash price was $157 per ton, down from the $238 per ton figure recorded in the year-ago quarter. This decline is attributed to the fall in spot prices witnessed in the first half of 2016 and lower contract prices settled in the second half.
Nitrogen: Gross margin was $55 million in the reported quarter, down from $142 million in the year-ago quarter due to weaker prices. Sales volumes for the quarter were 1.6 million tons, modestly higher than the year-ago recorded figure, mainly due to stronger demand for nitrogen solutions relative to ammonia. Average realized price of $182 per ton during the quarter was down considerably from the $288 per ton achieved in the year-ago quarter. The decline was due to the result of lower global energy costs and increased supply of nitrogen products.
Phosphate: Sales volumes declined to 0.7 million tons from the year-ago figure of 0.8 million tons due to weaker demand for feed and industrial products. Gross margin of $8 million for the quarter was significantly lower than the 2015 level. Average realized phosphate price for the quarter was $404 per ton, down from $522 per ton recorded in the year-ago period, owing to weaker fertilizer realizations.
Financials
Potash Corp.’s cash and cash equivalents were $32 million as of Dec 31, 2016, compared with $91 million as of Dec 31, 2015. As of Dec 31, 2016, long-term debt was $3,707 million compared with the year-age figure of $3,710 million.
Guidance
Potash Corp. expects full-year 2017 earnings to be in the range of $0.35 to $0.55 per share that includes merger related charges of $0.05 per share. The company expects total potash sales volume to be in the range of 8.7–9.4 million tons in 2017. It projects potash gross margin of $550-$800 million for the year.
Capital expenditures for the year are projected at $600 million.
Potash Corp. expects combined gross margin for nitrogen and phosphate in the band of $150–$400 million for 2017.
The company expects effective income tax rate in the range of 17–20% and selling and administrative expenses in the range of $225 million–$235 million for 2017.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted by 9.47% due to these changes.
Potash Corporation of Saskatchewan Inc. Price and Consensus
Potash Corporation of Saskatchewan Inc. Price and Consensus | Potash Corporation of Saskatchewan Inc. Quote
VGM Scores
At this time, Potash Corp's stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregte VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
While estimates have been broadly trending downward for the stock, the magnitude of this revision looks promising. Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.