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Intrepid Potash’s Margins Are Expected to Expand in 2017

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EBITDA margins

Earlier in this series, we saw how Intrepid Potash’s (IPI) sales are estimated to fall ~30% YoY (year-over-year). However, the company’s EBITDA (earning before interest, tax, depreciation, and amortization) margins are estimated to improve in 1Q17 and fiscal 2017.

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Analysts’ estimates

For each of the next four quarters, Intrepid Potash’s EBITDA is estimated to grow YoY. For 1Q17, analysts estimate EBITDA of $2.6 million—compared to -$1.06 million in 1Q16. During the same period, the EBITDA margins are expected to expand from -1% to 7%.

For fiscal 2017, the EBITDA is estimated to grow from -$8.8 million to $12.9 million. The margins are estimated to expand from -4% to 8.6%. Growth is favorable for Intrepid Potash because it has debt covenants tied to its EBITDA performance.

Estimates for peers

Wall Street analysts expect other players in the fertilizer industry (XLB) to have EBITDA margin expansion as well. Mosaic’s (MOS) EBITDA margins are estimated to expand from 15.6% to 17.3% YoY. CVR Partners’ (UAN) margins are estimated to expand from 23.9% to 35.5%. CF Industries’ (CF) margins are estimated to expand from 23% to 30% YoY.

Next, we’ll discuss earnings per share estimates for Intrepid Potash.

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