Potash Announced Quarterly Dividend of $0.10 per share
Potash Announced Plan to Buy Back 5% of Shares Over 1 Year Period
Potash Fourth Quarter Profit More than Doubles
Potash Guides Quarter 1 Profit Above Estimates
- Canadian fertilizer maker Potash Corp. of Saskatchewan Inc. said Thursday its 2007 fourth-quarter profit more than doubled, beating Wall Street's expectations, as strong global demand for fertilizers led to significant price increases.
- The company reported income of $376.8 million, or $1.16 per share, compared with $186 million, or 58 cents per share, in the year-ago period.
- Revenue rose 40 percent to $1.43 billion from $1.02 billion in the fourth quarter of 2006.
- Analysts polled by Thomson Financial, on average, estimated earnings of 98 cents per share on sales of $1.24 billion.
- Agricultural commodity prices continued to rise during the quarter, providing farmers with the ability to increase fertilizer use to achieve higher yields, the company said.
- The growth in demand led to price increases, especially for potash. The phosphate market also saw significant price increases, Saskatoon, Saskatchewan-based Potash Corp. said, in response to tight inventories, strong demand and rising input costs. Global demand for nitrogen also grew, and U.S. prices remained high.
- Canadian fertilizer maker Potash Corp. of Saskatchewan Inc. on Thursday issued first-quarter and full-year 2008 earnings guidance above Wall Street estimates, as robust global demand for agricultural products and fertilizers is expected to continue.
- The company expects first-quarter income between $1.30 and $1.60 per share. Analysts surveyed by Thomson Financial, on average, estimate earnings of $1.20 per share.
- For 2008, Potash Corp. expects profit of $6.25 per share to $7.25 per share. Analysts forecast full-year earnings of $5.87 per share.
Here is the full earnings report and well worth the read
There is not much more to say over what I've said countless times. The massive cash flows are allowing these companies to reduce debt, buy back stock, issue dividends. The analysts have missed the boat, they've been wrong on estimates, and they continue to be wrong on estimates. [Oct 23 - Analysts Still Doubting the Fertilizer Stocks] Each time one of these fertilizer companies report earnings they immediately become cheaper on a P/E basis as they beat, and guide up in the future. The stocks fluctuate wildly and my large position in this space can make the fund performance swoon for short periods of time, but we have no control over day to day pricing. The long term is very clear, and in the long run stock price is a reflection of profit streams. Despite hand wringing about an inventory number here or there that spooks people [Morgan Stanley Worried about Fertilizer], all these companies do is execute and prove they are the protypical secular growth market with the best macro trends behind them out of any I can find. Period.
Long Potash in fund and in personal account
4 comments:
Mark,
You seem to favor MOS over POT. Is this purely over a valuation basis? A lot of the media pundits always talk about POT, more so than MOS, when it comes to fertilizer companies.
And how come AGU gets no love? I've been on that thing since the low 30's.
I like all 3. I like MOS over POT at these valuations so I am overweight and have been overweight MOS since day 1; I can get very similar product for far cheaper with MOS. POT has the best ability to expand production in the long run though, so it gets a deserved premium; but I feel the premium is too wide hence I overweight MOS unless that gap closes considerably.
AGU gets a lot of talk from Cramer, so it's out there in the press - it just has a retail arm so its not quite the pure play as the other 2 if you are looking to invest solely for the fertilizer. It's almost like buying MOO since its more of broad exposure to ag boom due to the retail arm mixed with the fertilizer business as well.
Actually very similar parallel in solar with STP/SPWR. And why I've been in STP since $26 (owning or trading). SPWR gets all the press (as does POT), but better valuation has been in the other name. Doesn't mean that stock with lower valuation will go up more, but just what I prefer when you get a similar product.
A great article about POT:
http://www.nationalpost.com/rss/Story.html?id=261358
"Tens of millions of people are leaving poverty behind in China, India, Brazil and Eastern Europe each year, buying cars, homes and better food. Specifically, they are eating more meat, which requires more grains to feed the animals, which is why prices for corn and other basics have soared. And don't forget ethanol.
To get more out of their fields, farmers buy fertilizer -- demand is growing by 4% per year. Inventories are at their lowest in 17 years, and only Potash has the ability to raise production between now and 2012, by restarting idle mines, further cutting its industry-low costs."
Post a Comment