NEW YORK (TheStreet) -- Shares of Potash Corp. of Saskatchewan Inc. (POT) are down -1.61% to $36.69 in early trading on Wednesday after JPMorgan (JPM) lowered its rating to "neutral" from "overweight".
Potash Corp is nearing JPMorgan's price target of $38, but the firm warned falling crop prices in anticipation of record U.S. corn and soybean supplies could weigh on the company.
Separately, TheStreet Ratings team rates POTASH CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate POTASH CORP (POT) a HOLD. The primary factors that have impacted our rating are mixed, some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.45, 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 0.91 is somewhat weak and could be cause for future problems.
- 40.89% is the gross profit margin for POTASH CORP 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 20.23% compares favorably to the industry average.
- POT, with its decline in revenue, underperformed when compared the industry average of 7.1%. Since the same quarter one year prior, revenues fell by 20.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Chemicals industry. The net income has significantly decreased by 38.8% when compared to the same quarter one year ago, falling from $556.00 million to $340.00 million.
- Net operating cash flow has decreased to $539.00 million or 26.96% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- You can view the full analysis from the report here: POT Ratings Report