Earlier, we briefly discussed how Intrepid Potash (IPI) shifted its focus to produce trio. Besides trio, the company continues to diversify its income sources. In 3Q17, management stated that water and by-products are expected to generate $20 million–$30 million in sales in 2018.
Impact on the share price
In 2016, the stock briefly fell below $1 but recovered by the end the year. In 2017, the stock gradually traded higher each month. However, companies (MOO) (XLB) like Mosaic (MOS) and CVR Partners (UAN) were still depressed.
In the above chart, you can see how the share price trended with the EPS (earnings per share) over the years. You can see how the EPS impacted the share price, which improved YoY (year-over-year). In 3Q17, the company reported an EPS of -$0.02. It improved significantly YoY from an EPS of -$0.19 in 3Q16.
The EPS growth resulted from an expansion in the margins. In 3Q17, the gross margins expanded to 3.8% from a gross deficit of 7.6% in 3Q16. In recent quarters, Intrepid Potash’s share price gained momentum due to the improved EPS and favorable outlook.
Later in this series, we’ll discuss the expectation for Intrepid Potash’s EPS in the next 12 months. Next, we’ll discuss how the company managed its debt burden, which was one of the concerns.