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Rising Costs, Adverse Weather to Hit Cosan's Performance
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On Jan 11, we issued an updated research report on Cosan Limited . The company’s performance is likely to be hindered by unfavorable weather conditions, and rising costs of sales and services.
Let’s illustrate these factors in detail.
Guidance Cut to Reflect the Impact of Decline in Fuel Demand
At Raízen Combustíveis, Cosan narrowed the EBITDA projections for 2018 to R$2.75-R$2.95 billion from the earlier projection of R$2.85-R$3.15 billion. The guidance reflects reduction in Otto cycle fuel demand. The Otto cycle fuel sales dropped 3% in third-quarter 2018, impacted by 2018World Cup and a high level of unemployment.
Unfavorable Weather Conditions to Affect Productivity
In the third quarter, Cosan recorded 3% year-over-year fall in sugarcane productivity due to lesser rainfall concentration. At Raizen, Cosan expects crushed sugarcane volumes of 60-63 million tons for crop-year April 2018-March 2019.
The company has trimmed estimates for sugarcane crushing at Raízen due to drier weather which hit productivity at some regions. Sugar volume produced is projected at 3.9-4.1 million tons for the period, which is lower than the previous guidance of 4.2-4.6 million tons.
Rising Costs a Concern
Cosan has been dealing with the adverse impacts of rising costs of sales and services. Cost of sales and services sold in the third quarter marked a 42% year-over-year rise. Further, its financial expenses were affected by the Brazilian real depreciation against the U.S. dollar, specifically the unhedged amount of the perpetual bond.
Share Price Performance
In the past year, Cosan has lost around 3%, while the industry has slumped 55% during the same time frame.
Israel Chemicals has a long-term earnings growth rate of 9.5%. The company’s shares have gained 31% over the past year.
Quaker Chemical has an estimated long-term growth rate of 11%. Its shares have rallied 19% in a year’s time.
Mosaic has a projected long-term growth rate of 7%. Its shares have rallied 16% over the past year.
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It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Rising Costs, Adverse Weather to Hit Cosan's Performance
On Jan 11, we issued an updated research report on Cosan Limited . The company’s performance is likely to be hindered by unfavorable weather conditions, and rising costs of sales and services.
Let’s illustrate these factors in detail.
Guidance Cut to Reflect the Impact of Decline in Fuel Demand
At Raízen Combustíveis, Cosan narrowed the EBITDA projections for 2018 to R$2.75-R$2.95 billion from the earlier projection of R$2.85-R$3.15 billion. The guidance reflects reduction in Otto cycle fuel demand. The Otto cycle fuel sales dropped 3% in third-quarter 2018, impacted by 2018World Cup and a high level of unemployment.
Unfavorable Weather Conditions to Affect Productivity
In the third quarter, Cosan recorded 3% year-over-year fall in sugarcane productivity due to lesser rainfall concentration. At Raizen, Cosan expects crushed sugarcane volumes of 60-63 million tons for crop-year April 2018-March 2019.
The company has trimmed estimates for sugarcane crushing at Raízen due to drier weather which hit productivity at some regions. Sugar volume produced is projected at 3.9-4.1 million tons for the period, which is lower than the previous guidance of 4.2-4.6 million tons.
Rising Costs a Concern
Cosan has been dealing with the adverse impacts of rising costs of sales and services. Cost of sales and services sold in the third quarter marked a 42% year-over-year rise. Further, its financial expenses were affected by the Brazilian real depreciation against the U.S. dollar, specifically the unhedged amount of the perpetual bond.
Share Price Performance
In the past year, Cosan has lost around 3%, while the industry has slumped 55% during the same time frame.
Zacks Rank & Key Picks
Cosan carries a Zacks Rank #4 (Sell).
A few better-ranked stocks in the same sector areIsrael Chemicals Shs (ICL - Free Report) , Quaker Chemical Corp. (KWR - Free Report) and The Mosaic Company (MOS - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Israel Chemicals has a long-term earnings growth rate of 9.5%. The company’s shares have gained 31% over the past year.
Quaker Chemical has an estimated long-term growth rate of 11%. Its shares have rallied 19% in a year’s time.
Mosaic has a projected long-term growth rate of 7%. Its shares have rallied 16% over the past year.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>