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Must Know: An Analysis of PotashCorp’s 3Q15 Earnings

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PotashCorp: Share price movement

The Potash Corporation of Saskatchewan (POT), also known as PotashCorp, reported its 3Q15 earnings on October 29, with an EPS (earnings per share) of $0.34. Year-to-date, shares have fallen 40.5%. PotashCorp’s competitor, The Mosaic Company (MOS), has also fallen, by 24.4%. CF Industries Holdings (CF) and Agrium (AGU), on the other hand, have performed better, with returns of 4% and 0.5%, respectively. The broader VanEck Vectors Agribusiness ETF (MOO) has trended with these companies to return -6.6% year-to-date.

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3Q15 results

  • PotashCorp’s 3Q15 earnings of $0.34 missed analysts’ estimates of $0.38.
  • The company’s 3Q15 EPS fell 11%, down from $0.38 in the corresponding quarter a year ago.
  • During the third quarter, PotashCorp generated $1.5 billion in revenue, a 7% fall from $1.6 billion in 3Q14. Most of this weakness continues to come from the nitrogen segment where revenues fell 18% to $460 million.
  • The potash segment’s revenue also declined with revenue coming in at $603 million, down 5% from $633 million a year ago.
  • In contrast, the phosphate segment was positive with a growth of 4% to $466 million in 3Q15, from $446 million in 3Q14.

Series overview

In this series, we’ll analyze what the future holds for PotashCorp in light of its 3Q15 earnings. We’ll discuss performance and outlook for each of the three segments of the company. We’ll discuss prices, shipments, and volumes that are key to PotashCorp’s revenue. Finally, we’ll look at valuation multiples for the company and its peers.

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