| Will Potash Corp. (POT) Earnings Surprise Estimates in Q1? - Analyst Blog | |
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Potash Corp. of Saskatchewan, Inc. POT is set to release first-quarter 2015 results before the opening bell on Apr 30.
In the last quarter, the fertilizer giant had delivered a positive earnings surprise of roughly 6.5%. The company witnessed higher profits in the quarter on improved margins from all of its segments, strong potash sales volumes and better nitrogen and phosphate pricing.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Potash Corp. reported strong fourth-quarter 2014 results, with earnings soaring 88% year over year and profits rising 77% year over year, respectively. The bottom line was also supported by higher contributions from the company’s offshore investments. After a solid 2014, Potash Corp. stated that it commenced 2015 with a moderately positive outlook on its business as sluggish economic growth in markets outside the U.S. continues to affect the global outlook.
The company expects global potash shipments to be lower than the record level of more than 61 million tons achieved in 2014. It anticipates global potash shipments to be 58–60 million tons this year.
For the potash business, the company estimates sales volumes of 9.2–9.7 million tons and gross margin of $1.5–$1.8 billion for 2015. Higher operational capability at the New Brunswick and Saskatchewan facilities is expected to offer Potash Corp. with the flexibility to respond to market opportunities.
For phosphate, the company expects better market conditions to lead to improved gross margin owing to high-margin products, coupled with an anticipated improvement in pricing.
For nitrogen, the company expects fewer supply-related disruptions, reduced global energy prices and modestly weak agricultural fundamentals to result in a more tempered pricing environment this year. Assuming continued gas supply restrictions at its Trinidad facility, Potash Corp. expects nitrogen sales volumes to be in line with 2014 levels. However, the company anticipates nitrogen gross margin to be lower than the record level achieved in 2014 due to the soft pricing environment.
Combining all these expectations, Potash Corp. anticipates a strong earnings environment in 2015. The company projects earnings to be in the range of $1.90–$2.20 per share in 2015. For the first quarter, earnings are expected in the band of 45–55 cents per share.
However, Potash Corp. remains affected by macroeconomic uncertainties in addition to being exposed to other issues such as price volatility and currency exchange fluctuation. Moreover, sluggishness in markets outside the U.S. is affecting the global outlook. Also, an expected reduction in planted acres for corn during the spring season in North America, coupled with depressed crop pricing, has created an uncertainty regarding potash consumption in 2015.
Earnings Whispers
Our proven model does not conclusively show that Potash Corp. is likely to beat earnings 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: The Earnings ESP for Potash Corp. is +2.00% – the difference between the Most Accurate estimate of 51 cents and the Zacks Consensus Estimate of 50 cents.
Zacks Rank: Potash Corp. carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 and 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 other 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:
Alamos Gold Inc. AGI has an Earnings ESP of +50.00% and a Zacks Rank #3 (Hold).
Cliffs Natural Resources Inc. CLF has an Earnings ESP of +15.79% and a Zacks Rank #3.
Eldorado Gold Corp. EGO has an Earnings ESP of +50.00% and a Zacks Rank #3. 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 CLIFFS NATURAL (CLF): Free Stock Analysis Report ALAMOS GOLD INC (AGI): Free Stock Analysis Report ELDORADO GOLD (EGO): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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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. |