An investor’s guide to Potash Corp’s latest quarterly report

Why follow Potash Corp.?

Potash Corp. is one of the largest fertilizer producers in the world. Unlike CF Industries Holdings Inc. (CF), Mosaic Co. (MOS), Sociedad Quimica y Minera de Chile (SQM), and Intrepid Potash Inc. (IPI), which primarily focus on one or two types of fertilizers, Potash Corp. (POT) manufactures all three types of fertilizers: nitrogen, phosphate, and potash. Actual and Estimated EarningsEnlarge Graph

Preliminary assessment

Because POT is the first to release its earnings, the company’s earnings and discussion calls provide investors with a preliminary assessment of the industry’s outlook, which affects the aforementioned companies and the Market Vectors Agribusiness ETF (MOO). While company-specific factors like lower-cost mine expansions, share buybacks, and dividend increases do affect overall share price performance, companies’ performances are largely driven by industry factors.

Fourth quarter down—again

Fourth-quarter earnings for fiscal year 2013 were just released on Thursday, January 30, 2014, early in the morning, at 6:00 AM Eastern Time—one of the most unusual companies out there to be reporting results in the morning. Earnings adjusted for one-time special items came in at $0.31 a share, lower than the prior quarter’s $0.41 and comparable 2012 quarter of $0.52. Earnings also missed analysts’ average estimate of $0.32, although this wasn’t very significant.

Q4 2013 EarningsEnlarge Graph

Share price movements

As soon as the market opened up, Potash Corp. (POT) fell almost 6% from the prior day’s close. But it gradually recovered after the initial sell-off, ending the day with a slight loss of just 1.89%. Intrepid Potash Inc. (IPI), the Market Vectors Agribusiness ETF (MOO), and Sociedad Quimica y Minera de Chile (SQM) ended the day with losses of ~2.31%, ~0.39%, and ~1.22%, respectively. Mosaic Co. (MOS) managed to eke out a slight gain. While prices for most companies continued to fall as concerns about growth in emerging markets rose, a key driver of food consumption and fertilizer demand, shares have recovered since, along with the broad market.