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 (
) 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 expanding profit margins, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.
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Highlights from the ratings report include:
- 43.40% is the gross profit margin for POTASH CORP SASK INC which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, POT's net profit margin of 25.63% significantly outperformed against the industry.
- Net operating cash flow has remained constant at $872.00 million with no significant change when compared to the same quarter last year. In addition, POTASH CORP SASK INC has modestly surpassed the industry average cash flow growth rate of -2.66%.
- The current debt-to-equity ratio, 0.41, 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 0.89 is somewhat weak and could be cause for future problems.
- POT, with its decline in revenue, underperformed when compared the industry average of 4.7%. Since the same quarter one year prior, revenues fell by 11.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Chemicals industry and the overall market, POTASH CORP SASK INC's return on equity exceeds that of both the industry average and the S&P 500.
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 $33.2 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 16.00, below the S&P 500 P/E ratio of 18.00. Shares are down 4.6% year to date as of the close of trading on Monday.
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--Written by a member of TheStreet Ratings Staff.
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