Potash Corp of Saskatchewan Inc

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POT : NYSE : Basic Materials
$15.60 | %
Today's Range: 15.21 - 15.86
Avg. Daily Volume: 9,643,900
07/29/16 - 4:02 PM ET

Financial Analysis


POTASH CORP SASK INC's gross profit margin for the first quarter of its fiscal year 2016 has significantly decreased when compared to the same period a year ago. Sales and net income fell significantly; although net income growth outperformed the average competitor in its industry, revenue growth did not. POTASH CORP SASK INC has very weak liquidity. Currently, the Quick Ratio is 0.42 which clearly shows a lack of ability to cover short-term cash needs. The liquidity decreased from the same period a year ago, despite already having weak liquidity to begin with. This would indicate deteriorating cash flow.

During the same period, stockholders' equity ("net worth") has decreased by 7.20% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q1 FY16 Q1 FY15
Net Sales ($mil)1209.01665.0
EBITDA ($mil)344.0684.0
EBIT ($mil)177.0512.0
Net Income ($mil)75.0370.0


Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)74.0217.0
Total Assets ($mil)17510.017766.0
Total Debt ($mil)4564.04204.0
Equity ($mil)8286.08929.0


Profitability Q1 FY16 Q1 FY15
Gross Profit Margin32.8444.68
EBITDA Margin28.4541.08
Operating Margin14.6430.75
Sales Turnover0.330.4
Return on Assets5.568.81
Return on Equity11.7617.53
Debt Q1 FY16 Q1 FY15
Current Ratio0.871.17
Debt/Capital0.360.32
Interest Expense52.049.0
Interest Coverage3.410.45


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)838.92834.06
Div / share0.380.35
EPS0.090.44
Book value / share9.8810.71
Institutional Own % n/a n/a
Avg Daily Volume9621017.08648974.0

Valuation


HOLD. This stock's P/E ratio indicates a discount compared to an average of 24.44 for the Chemicals industry and a significant discount compared to the S&P 500 average of 25.05. To use another comparison, its price-to-book ratio of 1.73 indicates a discount versus the S&P 500 average of 2.81 and a significant discount versus the industry average of 5.91. The current price-to-sales ratio is well above the S&P 500 average and above the industry average, indicating a premium. Upon assessment of these and other key valuation criteria, POTASH CORP SASK INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
POT 14.62 Peers 24.44   POT 7.15 Peers 15.53

Discount. A lower P/E ratio than its peers can signify a less expensive stock or lower growth expectations.

POT is trading at a significant discount to its peers.

 

Discount. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

POT is trading at a significant discount to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
POT 19.78 Peers 19.75   POT NM Peers 2.43

Premium. A higher price-to-projected earnings ratio than its peers can signify a more expensive stock or higher future growth expectations.

POT is trading at a significant premium to its peers.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

POT's negative PEG ratio makes this valuation measure meaningless.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
POT 1.73 Peers 5.91   POT -37.44 Peers 43.16

Discount. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

POT is trading at a significant discount to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, POT is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
POT 2.47 Peers 2.18   POT -17.99 Peers -6.08

Premium. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

POT is trading at a premium to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

POT significantly trails its peers on the basis of sales growth

 

 

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