Morningstar | We Maintain Our $81 FVE After Compass Minerals Reports 1Q Snow Days and Salt Volumes
Compass Minerals reported first-quarter snow days and salt volume sales that were generally in line with our expectations. Compass sold roughly 4.1 million tons of salt during the first quarter of 2019, which is roughly 14% below the first quarter of 2018. We maintain our forecast for around 10.5 million tons of total salt sales for Compass in 2019, which is at the high end of guidance, as the company continues to restore production at its low-cost Goderich mine. In the update, management said Goderich production continues to improve, which we point to as another encouraging sign that the company will be able to overcome the operational issues that have plagued the mine over the past 19 months.With no changes to our outlook, we maintain our $81 fair value estimate. Our wide moat rating is also unchanged. At current prices, we view Compass as materially undervalued, trading firmly in 4-star territory.
The 2018-19 winter saw an above-average number of snow days, which should bode well for deicing salt prices in the upcoming bid season. Compass reported 167 snow days during the winter season in the 11 representative cities that the company measures throughout the Midwest and Great Lakes regions in North America. This figure was roughly 8% above the 10-year average number of snow days. Historically, deicing salt prices have moved in line with winter weather. When also adding Compass' production issues, we forecast a tight deicing salt market in Compass' territories will lead to price increases in the upcoming bid season.
Compass Minerals International is a holding company. Through its wholly owned subsidiaries, the company is a provider of minerals, including salt, secondary nutrients and micronutrients, and specialty chemicals. The company has three reportable segments: Salt, which produces, markets and sells salt and magnesium chloride and sodium chloride; Plant Nutrition North America, which includes sales of sulfate of potash specialty fertilizer and specialty plant nutrients; and Plant Nutrition South America, which manufactures, distributes and markets an array of specialty plant nutrients and supplements developed and formulated from primary and secondary nutrients, specialty plant nutrients and biostimulants.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.