It has been about a month since the last earnings report for Potash Corporation of Saskatchewan Inc. . Shares have lost about 2.4% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Potash Corp Tops Earnings & Revenues Estimates in Q1
Potash Corp. posted a profit of $149 million or $0.18 per share in first-quarter 2017, up 98.7% from $75 million or $0.09 per share it earned a year ago. Earnings per share for the reported quarter beat the Zacks Consensus Estimate of $0.10.
Net sales (as adjusted) for the quarter declined 9% year over year to $979 million, but surpassed the Zacks Consensus Estimate of $928 million.
Potash: Potash gross margin was $160 million in the reported quarter, up from $88 million in the year-ago period due to higher offshore sales volumes and reduced per ton costs, which more than offset lower offshore netbacks. Sales volumes for the segment were 2.2 million tons, up 22.2% year over year. Average realized potash price was $166 per ton, down from the year-ago quarter figure of $178. This decline is due to the result of weaker prices in standard-grade markets more than offsetting higher prices in North America.
Nitrogen: Gross margin was $97 million in the reported quarter, down from $107 million in the year-ago quarter due to weaker prices and slightly lower sales volumes. Sales volumes for the quarter were 1.6 million tons, down 6% due to lower industrial demand and seasonal weakness for nitrogen solutions. Average realized price of $229 per ton during the quarter was down from the year-ago quarter figure of $244. The decline was due to increased global supply weighed on benchmark pricing for all products.
Phosphate: Sales volumes dipped 0.6 million tons from the year-ago figure of 0.7 million tons due to weaker demand for liquid fertilizer products. Gross margin of $11 million for the quarter was significantly lower than the $39 million in the year ago quarter. Average realized phosphate price for the quarter was $423 per ton, down from $499 per ton recorded in the year-ago period, owing to lower benchmark pricing of all products.
Potash Corp.’s cash and cash equivalents were $62 million as of Mar 31, 2017 compared with $74 million as of Mar 31, 2016. As of Mar 31, 2016, long-term debt was $3,707 million at par with the year-ago figure.
Potash Corp. expects full-year 2017 earnings in the range of $0.45–$0.65 per share (up from $0.35 to $0.55 per share expected earlier) that includes merger related charges of $0.05 per share. The company expects total potash sales volume in the range of 8.9–9.4 million tons in 2017. It projects potash gross margin of $600-$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 2–5% and selling and administrative expenses in the range of $220 million–$230 million for 2017.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Potash Corp's stock has a subpar score of 'D', on both growth and momentum front. The stock was allocated a grade of 'F' on the value side, putting it in the last quintile 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.
Our style scores indicate investors will probably be better served looking elsewhere.
The stock has a Zacks Rank #1 (Strong Buy). We are expecting an above average return from the stock in the next few months.