Morningstar | K+S Shares Plummet on Below-Consensus 2018 Guidance; Shares Remain Slightly Overvalued
After the market closed on Aug. 9, K+S disclosed 2018 EBITDA guidance of EUR 660 million-EUR 740 million, which was well below consensus expectations as well as our own estimate. After updating our valuation model, we now expect the company to generate around EUR 730 million in EBITDA this year. As a result, our fair value estimate falls to EUR 19 per share from EUR 20 for no-moat K+S.Shares traded sharply lower in response to the company's disappointing guidance. Even so, we still view K+S as overvalued, with shares trading around 10% above our fair value estimate.
K+S will report second-quarter results on Aug. 14. Other than disclosing second-quarter EBITDA of EUR 105 million, the company provided no additional second-quarter financial results and no additional 2018 guidance. However, with other potash and salt companies under our coverage reporting price increases during the second quarter and guiding to higher prices in 2018, the reduced EBITDA guidance likely stems from lower expectations for potash volumes and higher unit production and transportation costs in both segments.
K+S is engaged in the chemical sector. Co. has three business segments. The Potash and Magnesium Products segment combines the production and marketing of potash fertilizers and fertilizer specialities as well as potash and magnesium compounds for technical, industrial and pharmaceutical applications. The Salt segment encompasses the production and marketing of food grade salt, industrial salt and salt for chemical use, de-icing salt and sodium chloride brine. The Complementary Activities segment bundles together recycling activities and waste disposal or reutilisation in potash and rock salt mines as well as catsan® granulation.
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.