Fertilizer manufacturer Potash Corp. (NYSE: POT) will release a report the on the company's 2010 first quarter results at 6:00 AM eastern time on April 29. A conference call to discuss the results will be held on the same day at 1:00 in the afternoon.
Potash Corporation of Saskatchewan Inc. is the world''s largest potash company, the third largest phoshate producer and the second largest nitrogen producer in the world. Behind its growing success lies a vital infrastructure: knowledgeable PCS Sales staff throughout Canada and the United States, a transportation network that includes truck, train, barge, lake ship and ocean vessel, and warehouses strategically located in major consuming areas.
The consensus earnings estimate is $1.31 net earnings per share on revenues of $1.48 billion. In the same quarter of 2009, Potash earned $1.02 on $858 million of sales. Results for the 4th quarter of 2009 were net income of 80¢ on revenues of $1.1 billion.
The individual estimates from the 19 analysts following Potash cover a wide spread of expectations. The estimates on per share earnings range from 81¢ to $1.50 per share. The revenues estimates are from $1.1 to $1.7 billion. Potash management released updated earnings guidance on March 11, raising the company's own expectations from between 70¢ and $1.10 per share up to $1.30 to $1.50. It appears that some of the analysts have not been keeping up with the news.
Over the last four quarters, the actual estimates have been pretty much in line with the estimates. This is probably due to the nice updates the company management provides a month before the actual earnings date. With the company itself predicting earnings of $1.30 to $1.50, the $1.31 consensus estimate should be pretty close or a little short of actual earnings.
In 2007 and 2008, Potash was one of the great stock market and commodity stories. The stock rocketed from $40 per share in early 2007 to around $240 in June of 2008. The share price appeared justified as earnings hit $11 per share in 2008. In the 2nd half of 2008 the wheels came off the boom in agricultural commodities and Potash earned just $3.25 in 2009. However, to put things in perspective the 2009 net earnings were the 3rd highest in company history after 2007 ($3.40 per share) and 2008.
Potash Corp is the world's largest producer of the mineral potash, used as a fertilizer. The company also produces phosphate and nitrogen based fertilizer and animal feed products. The company's control of the large potash deposits in Canada plus mining operations in Chile, China, India and Jordan has given the company the power to increase the price it receives for its products. The commodity market correction of 2008 and 2009 showed investors that the power to increase prices was not infinite and when the price gets high enough, competitors will find their way into the market at about the same time farmers decide they cannot pay the current prices for fertilizer.
Potash is projected to earn $5.50 for all of 2010 and $7.40 in 2011. The question now is whether fertilizer is a growth business or a cyclical one. The direction of guidance from Potash management for the current quarter seems to indicate the company is back on a growth path.
