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CVR Partners (UAN) Down 20% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for CVR Partners, LP (UAN - Free Report) . Units have lost nearly 20% 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.

CVR Partners Records Q4 Loss, Revenues Beat Estimates

CVR Partners posted a loss of $0.13 per share in the fourth quarter of 2016, versus a profit of $0.26 reported a year ago. Analysts polled by Zacks were expecting earnings of $0.03 per share on an average for the quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) were $18.3 million in the reported quarter, down from $28.5 million recorded a year ago.

The partnership posted revenues of $84.9 million in the quarter, up around 29% year over year. Revenues marginally beat the Zacks Consensus Estimate of $84.7 million.

Operational Statistics

CVR Partners produced 207,600 tons of ammonia and purchased an additional 2,000 tons in the reported quarter of which 62,600 net tons were available for sale while the rest was upgraded to other fertilizers including 330,700 tons of UAN.

Consolidated average realized gate prices for UAN and ammonia were $147 per ton and $352 per ton, respectively, in the reported quarter.

Financials

CVR Partners ended 2016 with cash and cash equivalents of $55.6 million, up around 11% year over year. Total debt was $623.1 million, a roughly five-fold year over year rise.

CVR Partners has decided not to pay any cash distribution for the fourth quarter of 2016.

Outlook

The partnership said that it is seeing a considerable improvement in nitrogen fertilizer pricing (for deliveries during first-half 2017) since Dec 2016, driven by the delay of additional supply coming onstream from new and expanded U.S. production facilities, reduced levels of imports into the U.S. and the expectation of a strong spring corn planting season in the U.S.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There has been one downward revision for the current quarter. In the past month, the consensus estimate also shifted downward by 62.5% due to these changes.

CVR Partners, LP Price and Consensus

 

CVR Partners, LP Price and Consensus | CVR Partners, LP Quote

VGM Scores

At this time, CVR Partners' stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. 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 aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.

The stock is suitable solely for value based on our styles scores.

Outlook

Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.




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