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"We rate INTREPID POTASH INC (IPI) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its feeble growth in its earnings per share, deteriorating net income, disappointing return on equity, poor profit margins and generally disappointing historical performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- INTREPID POTASH INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, INTREPID POTASH INC reported lower earnings of $0.30 versus $1.15 in the prior year. For the next year, the market is expecting a contraction of 63.3% in earnings ($0.11 versus $0.30).
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Chemicals industry. The net income has significantly decreased by 161.1% when compared to the same quarter one year ago, falling from $2.03 million to -$1.24 million.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Chemicals industry and the overall market, INTREPID POTASH INC's return on equity significantly trails that of both the industry average and the S&P 500.
- The gross profit margin for INTREPID POTASH INC is currently lower than what is desirable, coming in at 26.00%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -1.20% is significantly below that of the industry average.
- The share price of INTREPID POTASH INC has not done very well: it is down 9.49% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- You can view the full analysis from the report here: IPI Ratings Report