| Potash Corp. (POT): What Will Q4 Earnings Release Unveil? | |
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Potash Corp. of Saskatchewan, Inc. POT is set to release fourth-quarter 2015 results before the opening bell on Jan 28.
In the last quarter, the fertilizer giant had delivered a negative earnings surprise of roughly 10.53%. The company’s profits declined around 11% in the quarter owing to weak nitrogen pricing.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Potash Corp. is currently faced with macroeconomic uncertainties and other issues such as price volatility and currency exchange fluctuation. Softness across certain developing markets is weighing on the global outlook. Moreover, depressed crop pricing has created uncertainty about potash consumption. Further, a challenging currency environment, combined with economic weakness, has resulted in sluggish demand for potash across certain emerging markets.
Potash Corp. has cut its sales volume guidance to a range of 9–9.2 million tons for the fourth quarter of 2015 and expects potash gross margin of $1.4–$1.5 billion, reflecting weaker volumes and pricing.
Also, in its third-quarter call, the company announced plans to take three-week inventory shutdowns at its Allan, Cory and Lanigan operations in Saskatchewan, starting in mid-Dec 2015. The combination of these shutdowns and the closure of Penobsquis are expected to reduce production by about 500,000 tons in the fourth quarter and lead to modestly higher per-ton cost of goods sold.
Potash Corp. has also lowered the top end of its earlier provided combined nitrogen and phosphate gross margin guidance range, and now expects to generate the same in the band of $1–$1.1 billion.
Additionally, potash pricing is expected to remain under pressure. Weak pricing is anticipated to lead to lower nitrogen margins for 2015. Moreover, nitrogen sales volumes for 2015 are expected to be lower on a year-over-year basis owing to weaker demand in North America, lower production due to mechanical challenges and an expansion-related turnaround. The company has also been facing earnings headwinds from tax changes.
Earnings Whispers
Our proven model does not conclusively show that Potash Corp. is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Potash Corp. is currently pegged at 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at 32 cents.
Zacks Rank: Potash Corp. carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks that Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Franco-Nevada Corporation FNV has an Earnings ESP of +8.33% and a Zacks Rank #3 (Hold).
Agrium Inc. AGU has an Earnings ESP of +4.86% and a Zacks Rank #3.
Cliffs Natural Resources Inc. CLF has an Earnings ESP of +3.45% and a Zacks Rank #3.
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Potash Corporation of Saskatchewan Inc.
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CODE : POT.TO |
ISIN : CA73755L1076 |
CUSIP : 73755L1076 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Potash Corp. is a producing company based in Canada. Potash Corp. is listed in Canada. Its market capitalisation is CA$ 21.7 billions as of today (US$ 17.2 billions, € 14.4 billions). Its stock quote reached its lowest recent point on March 24, 1995 at CA$ 10.00, and its highest recent level on September 21, 2007 at CA$ 99.07. Potash Corp. has 840 009 984 shares outstanding. |