NEW YORK ( TheStreet) -- The fertilizer industry has not seen this kind of bullishness since before the financial crisis, but if 2011 is looking like a boom year for agriculture in general, investment pros say there's also abundant reason for caution.
Potash survived BHP Billiton's hostile takeover pursuit, saved in the end by the Canadian government, which blanched at the notion of selling off another national resource to a foreign entity. BHP's bid valued Potash at $40 billion. The fertilizer company's market cap stands now at nearly $48 billion. Income Statement
Potash is slated to report fourth-quarter results on Jan. 27. On average, analysts are looking for a profit of $1.60 a share and revenue of $1.59 billion. A year ago, the company earned 80 cents a share on revenue of $1.1 billion. Analyst Ratings
Of the 25 analysts covering Potash, 40% rate the stock at the equivalent of hold. The rest are bullish: 44% have strong buy ratings and 16% have moderate buy ratings.
Mosaic's 2011 may very well depend on environmental litigation surrounding its phosphate mining operations in Florida. Activists including the Sierra Club have effectively blocked Mosaic from running the mine, called Fort Meade, at full capacity. Given the price trends for fertilizers, Mosaic would very much like to run the mine at full capacity. The court battle could be resolved within a few months; some analysts say Mosaic will win; others aren't so sure. Unsurprisingly, the company itself expresses confidence. "Our South Fort Meade mine is one of the most cost effective and efficient operations in the world and we fully expect that we will be able to mine the ample resources located at South Fort Meade in the years ahead," Mosaic chief Prokopanko told investors in the earnings conference call Wednesday. Regardless, to make up for its shortfall in supply, Mosaic has had to fill customer orders by buying phosphate rock from other sources, which could trim its profits. On the other hand, a scaled-back Fort Meade will push global phosphate prices higher. Income Statement
Mosaic, traditionally the first fertilizer company out of the gates each quarterly earnings season, just reported results on Tuesday for its fiscal second quarter, which ended in November. The company's adjusted profit of $1.01 (which excludes a one-time gain) bested analysts' estimates of 91 cents a share. For the fiscal year 2011, which ends in May, Wall Street is looking for Mosaic to turn a profit of $3.84 a share, on revenue of $9.18 billion. A year earlier, Mosaic earned $1.94 a share on revenue of $6.76 billion. Analyst Ratings
Half of the 18 analysts covering Mosaic rate the stock at the equivalent of hold; one analyst even has a "strong sell" rating. On the bullish side, 44% grade Mosaic shares at either strong or moderate buys.
Calgary-based Agrium is the most diversified of fertilizer players, doing business in all three nutrient classes: nitrogen, phosphate and potash. Along with Potash and Mosaic, Agrium is a member of the powerful North American potash cartel Canpotex, in which the companies team up to sell their product to overseas buyers. Agrium also owns a chain of big farm depots, so it can take advantage of the retail side of the ag business as well. Income Statement
Agrium is scheduled to report fourth-quarter results on Feb. 9. The Wall Street consensus is targeting a profit of $1.15 a share for the period, and revenue of about $1.9 billion. In the corresponding quarter of 2009, Agrium earned just 19 cents a share on revenue of $1.4 billion. Analyst Ratings
Analysts have a far more bullish outlook in Agrium than other fertilizer names. More than 68% of the 22 analysts covering the company rate its stock at strong buy. Four analyst have the equivalent of moderate buy ratings on Agrium, while just three have hold ratings
CF Industries, the most richly valued of fertilizer names, subsumed rival Terra Industries last year after a yearlong takeover struggle. Criticized by some at the time, the deal now looks like a bargain. CF remains nitrogen-focused and, therefore, heavily levered to the fate of the nation's corn crop. Corn sucks up nitrogen and, thus, the higher the price of corn, the better for CF, since farmers will then be persuaded to increase their maize acreage. Income Statement
CF Industries, based in Deerfield, Ill., has yet to set a release date for its fourth-quarter results. Analyst are expecting a profit of $2.44 a share for the period, and revenue of about $1.2 billion. The addition of Terra will skew the year-over-year comparisons. In the fourth quarter of 2009, CF without Terra had a bottom line of 89 cents a share, which came on revenue of $507 million. Analyst Ratings Of the 14 analysts covering CF, about 43% (or six) rate its stock at hold. Five analysts have the equivalent of strong buy ratings on the company, while three have moderate buy ratings -- Written by Scott Eden in New York >To contact the writer of this article, click here: Scott Eden. >To follow the writer on Twitter, go to http://twitter.com/ScottEden. >To submit a news tip, send an email to: firstname.lastname@example.org.