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Agrium Inc. (USA) (AGU) Earnings: An Early Look

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Earnings season is now starting to wind down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Agrium Inc. (USA) (NYSE:AGU) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Agrium isn’t the best-known play in the fertilizer space, but it is one of the most diversified, having exposure to both nitrogen-based and potash fertilizer production. Let’s take an early look at what’s been happening with Agrium over the past quarter and what we’re likely to see in its quarterly report on Friday.

Stats on Agrium

Analyst EPS Estimate $2.00
Change From Year-Ago EPS (14.5%)
Revenue Estimate $3.20 billion
Change From Year-Ago Revenue 0.6%
Earnings Beats in Past 4 Quarters 3

Source: Yahoo! Finance.

Will Agrium get its growth going this quarter?
Analysts have been extremely bullish on Agrium’s prospects for the just-ended quarter, having boosted their consensus estimates by more than $0.30 per share in just the past month. Investors have also been optimistic, and the stock has risen more than 12% since mid-November.

That rise in analyst estimates came when Agrium pre-announced guidance for its fourth quarter back in January, raising its call from a range of $1.50-$1.90 per share based on high prices for grain and oilseed. Moreover, pointing to low inventories of grain worldwide, CEO Mike Wilson anticipated continued strength in 2013.

Agrium has already seen some of the benefits from fertilizer demand. Near the beginning of the year, Agrium, along with partners Potash Corp./Saskatchewan (USA) (NYSE:POT) and Mosaic Co (NYSE:MOS), entered into an agreement with Sinofert Holdings to provide potash-based fertilizer to China. Although the $400-per-ton price was well below the previous contract’s price of $470, the deal should help get rid of a glut of potash on the market.

What sets Agrium apart from Mosaic and PotashCorp is its nitrogen-fertilizer production. Along with nitrogen-focused Terra Nitrogen Company, L.P. (NYSE:TNH) and CVR Partners LP (NYSE:UAN) , Agrium has used cheap natural gas to reduce its costs. Yet Agrium goes further by giving its customers a choice among different types of fertilizer depending on what market offers better value at any given time. That flexibility will also help Agrium outperform Terra and CVR when natural-gas prices rise in the future.

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