Look Out Below: Iron Ore Prices Keep Falling
With China’s economy “struggling,” iron ore prices will remain weak. Let’s take a look at how the miners intend to handle the situation.
POT
Delays from Asia Pressure Earnings at Potash
Agricultural nutrient provider Potash (click ticker for report: ) announced relatively weak fourth quarter results Thursday morning. Revenue tumbled 12% year-over-year to $1.6 billion, falling below consensus estimates. Earnings also missed the mark, dropping 38% year-over-year to $0.48 per share. Company-wide gross margins sank 1,200 basis points year-over-year to 35.7% Potash, generally the company’s namesake nutrient, was weak everywhere outside of North America. Total potash volumes declined 17% year-over-year to 1.3 million tonnes, even though North American volumes were 39% above the comparable period of 2011. Going into 2013, management thinks demand for potash will remain strong in North America, mentioning on the conference call: “In North America, dry conditions persist in certain areas, but many of our customers say; … Read more
Solid Long-term Fundamentals Remain Intact at Potash
Near-term headwinds persist at fertilizer giant Potash (click ticker for report: ), which reported a mixed bag in its third quarter results Thursday morning. The Canadian firm saw revenue fall 8% year-over-year to $2.1 billion, slightly better than consensus expectations. Earnings per share slid 22% year-over-year to $0.74, which was worse than consensus estimates. Potash (the product) sales tumbled 10% year-over-year to $887 million, the result of declining prices and slumping orders from India and China. Total tonnage sales in North America increased 25% year-over-year to 1.0 million tonnes, as farmers have continued to invest in fertilizer to compensate for lower yields resulting from poor growing conditions in the US. Sales in Latin America also remained brisk, growing year-over-year driven … Read more
Monsanto Reports Weak Fourth Quarter Results
Monsanto reported weak results, but shares remain fairly valued.
Earnings Fall at Mosaic
Weak demand from India and China put pressure on Mosaic’s profitability. We think shares are fairly valued.
Agrium’s Results to Be at High End of Guidance Range
Agricultural giant Agrium cited strong grain prices and tight supply as drivers for its strong first-half 2012 performance. We’re reiterating our fair value estimate on the company.
Demand Headwinds Refocus Materials Companies
Due to weak macroeconomic conditions, as well as tempered demand from China, we’ve seen several materials firms announce structural changes. BHP (click ticker for report: ) announced plans to focus on cost cutting rather than production increases in the wake of weaker iron ore prices and end markets. Rio Tinto (click ticker for report: ), one of our favorite miners due to its attractive cost position, also announced cost cuts in its Australian mining business due to a long-term decline in demand growth from China. The firm thinks economic growth in the country could slow to 5%-6% by 2020, and we think a policy shift in favor of consumption rather than production could occur in the nation. Another diversified miner, … Read more
Nelson: The 16 Most Important Steps To Understand The Stock Market
A previous version of this article appeared on our website July 21, 2013. Refreshed and updated throughout, as of July 2018. By Brian Nelson, CFA After earning my MBA at the University of Chicago Booth School of Business and training stock and credit analysts from large organizations over the past decade or so, I have heard just about every question (though I admit I am still surprised by many things and remain a very humble student of the markets). I’ve also spent years perfecting the discounted cash flow process for large research organizations such as Morningstar and studied under one of the most famed aggressive growth investors of all time, Richard Driehaus. My knowledge runs the gamut from value through … Read more
Efficacy of the Dividend Cushion Ratio
A version of this article was originally published September 2019. The Dividend Cushion ratio is one of the most powerful financial tools an income or dividend growth investor can use in conjunction with qualitative dividend analysis. The ratio is one-of-a-kind in that it is both free-cash-flow based and forward looking. Since its creation in 2012, the Dividend Cushion ratio has forewarned readers of approximately 50 dividend cuts. We estimate its efficacy at ~90%. By Valuentum Analysts Key Takeaways: The Dividend Cushion ratio is a helpful tool to use to cushion your dividend growth or income portfolio against potential dividend cuts. The ratio also helps to assess the growth potential of a company’s dividend, above and beyond current expectations of payout … Read more