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Could PotashCorp’s Earnings Turn the Corner in 2017?

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So far in this series, we’ve discussed how PotashCorp’s (POT) sales have fallen, and its margins have narrowed over the past five years. This descent had a direct impact on the company’s bottom line, with fiscal 2016’s being hit the worst.

The decline

In 2016, PotashCorp reported EPS (earnings per share) of $0.51 earnings per share, a steep decline from the $1.52 reported in 2015. In other words, the company’s earnings fell 66% YoY (year- over-year). In fact, as shown in the chart above, the company’s earnings have fallen in each of the last five years.

Falling earnings are never good news for investors, especially when they could be better off with a company that grows their investment. Fertilizer companies (SOIL) Mosaic (MOS), CF Industries (CF), and Intrepid Potash (IPI) have all struggled.

Outlook

According to Wall Street analysts’ estimates, PotashCorp is expected to report EPS of $0.53, which would result in a small growth of 3.1% YoY. Earnings are estimated to grow 30% in 2018 and 16% in 2019.

These estimates indicate that the market environment will be favorable for PotashCorp in 2018. However, keep in mind that many were hoping 2017 to be positive. In the next part of this series, we’ll discuss PotashCorp’s returns on assets and equity.

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