Based in Tel Aviv, Israel Chemicals (ICL) operates two segments: Essential Minerals and Specialty Solutions. Under the Essential Minerals segment, the company produces and sells potash, phosphate, and specialty fertilizers to the agricultural market globally. Under the Specialty Minerals segment, it produces and sells to the industrial market and the food market. Israel Chemicals is one of the top ten global producers of NPK (nitrogen, phosphorous, and potassium) fertilizers by capacity.
Over the recent decade, Israel Chemicals has fallen 8.2% and significantly underperformed the S&P 500 Index’s rise of 69.2% over the same period. The company’s earnings have deteriorated in the recent five years. During that period, the company fell 52.9%, underperforming the S&P 500 Index by 123.0%.
Phosphate producers such as Israel Chemicals and Mosaic (MOS) have failed to live up to investors’ expectations, primarily due to poor price realizations for their products. However, YTD (year-to-date) in 2017, Israel Chemicals has risen 7.7%, which, while positive, was slightly below the S&P 500 Index’s rise of 11.5% over the same period.
Israel Chemicals’ performance has suffered primarily due to a weakness in fertilizer prices. Phosphate prices have fallen over the years, and there are low expectations for recovery this year. For 2017, EPS (earnings per share) is expected to fall 25.7% year-over-year. However, in 2018, analysts expect EPS to rise 27.0% year-over-year. That indicates that analysts expect a strong recovery in 2018, which should also benefit fertilizer producers such as PotashCorp (POT) and Agrium (AGU).
Next, we’ll look at Compass Minerals International (CMP).