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Potash Corporation Of Saskatchewan Inc. Stock Buy Recommendation Reiterated (POT)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Potash Corporation of Saskatchewan (NYSE: POT) has been reiterated by TheStreet Ratings as a buy with a ratings score of B-. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 1.1%. Since the same quarter one year prior, revenues rose by 20.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has significantly increased by 98.38% to $738.00 million when compared to the same quarter last year. In addition, POTASH CORP SASK INC has also vastly surpassed the industry average cash flow growth rate of -10.79%.
  • The current debt-to-equity ratio, 0.39, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
  • 45.60% is the gross profit margin for POTASH CORP SASK INC which we consider to be strong. Regardless of POT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, POT's net profit margin of 26.47% compares favorably to the industry average.
  • POTASH CORP SASK INC has improved earnings per share by 12.5% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, POTASH CORP SASK INC reported lower earnings of $2.38 versus $3.52 in the prior year.

Potash Corporation of Saskatchewan Inc., together with its subsidiaries, produces and sells fertilizers and related industrial and feed products primarily in the United States and Canada. The company mines and produces potash, which is used as fertilizer. Potash Corporation of Saskatchewan has a market cap of $37.1 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 18.00, below the S&P 500 P/E ratio of 18.00. Shares are up 5.9% year to date as of the close of trading on Tuesday.

You can view the full Potash Corporation of Saskatchewan Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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