| Potash Corp. Downgraded to Strong Sell: Should You Dump It? | |
| | |
|
Zacks Investment Research downgraded Potash Corporation of Saskatchewan Inc. POT to a Zacks Rank #5 (Strong Sell) on Nov 19. Why the Downgrade?
Potash Corp. posted a profit of $282 million or 34 cents per share in the third quarter of 2015, a roughly 11% fall from $317 million or 38 cents per share earned a year ago. Earnings also missed the Zacks Consensus Estimate of 38 cents.
Revenues for the quarter (as adjusted) slipped 6.6% year over year to $1,401 million and missed the Zacks Consensus Estimate of $1,482 million.
The company cut its sales volume guidance to a range of 9-9.2 million tons and expects gross margin of $1.4-$1.5 billion, reflecting weaker volumes and pricing. The company also reduced its 2015 earnings guidance to the range of $1.55-$1.65 per share from $1.75-$1.95 per share expected earlier. Potash Corp. remains exposed to macroeconomic uncertainties and other issues such as price volatility and currency exchange fluctuation. Sluggishness across certain developing markets is affecting the global outlook. Expected reduction in planted acres for corn in North America along with depressed crop pricing has created an uncertainty on potash consumption. Moreover, a challenging currency environment coupled with economic weakness has contributed to a sluggish demand environment for potash in specific emerging markets. The company also remains exposed to a volatile pricing environment. Potash pricing is expected to remain under pressure moving ahead. Higher supply, reduced global energy prices and modestly softer agricultural fundamentals have contributed to a more tempered nitrogen pricing environment this year. Weak pricing is expected to lead to lower nitrogen margin in 2015. Moreover, nitrogen sales volumes are expected to be lower this year on a year-over-year basis due to weaker demand in North America, lower production as a result of mechanical challenges and an expansion-related turnaround. Potash Corp. will also face earnings headwinds from changes in the tax rate. The amendments to potash taxation in conjunction with the government of Saskatchewan's 2015-16 provincial budget are expected to reduce the company's 2015 pre-tax earnings. Changes in timing of deduction for expansion and maintenance spending in Saskatchewan will significantly impact earnings in 2015 and to a lesser extent in 2016 as the company winds down its capital expansion projects and incurs increased maintenance capital spending as a result of these expansions.
Other Stocks to Consider Some better-ranked companies in the basic materials space include Celanese Corporation CE, Innospec Inc. IOSP and Stepan Company SCL, all carrying a Zacks Rank #1 (Strong Buy). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report POTASH SASK (POT): Free Stock Analysis Report CELANESE CP-A (CE): Free Stock Analysis Report INNOSPEC INC (IOSP): Free Stock Analysis Report STEPAN CO (SCL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
|
|
|
Potash Corporation of Saskatchewan Inc.
|
|
|
CODE : POT.TO |
ISIN : CA73755L1076 |
CUSIP : 73755L1076 |
| |
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. |