Potash Corp./Saskatchewan (USA) (POT), Mosaic Co (MOS): How to Dig Out the Real Meat From an Earnings Report

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Who should be excited?

PotashCorp didn’t leave its investors with much to get excited about. They would have expected a brighter outlook after the better-than-expected quarter, but that was not to be. PotashCorp stuck to its earlier guidance of full-year earnings to be between $2.75 and $3.25 per share.

But yes, PotashCorp’s first-quarter report certainly leaves investors of peer companies with a lot to look forward to, especially from companies that are about to report numbers over the next few days, like CF Industries and Agrium Inc. (USA) (NYSE:AGU). Both will report on May 8.

PotashCorp’s high volumes for its namesake nutrient means CF should have done fantastically well in its last quarter because its core product nitrogen has much wider application than potash. PotashCorp also realized 12% higher prices for ammonia (a nitrogen product) in the first quarter. I strongly feel analysts are too pessimistic about CF with their forecasts of 4.6% lower revenue for the company. Likewise, the Street expects a 3% drop in Agrium’s first-quarter revenue year-on-year even though nitrogen is the highest contributor to Agrium’s largest division, retail. Through its wholesale division too, Agrium Inc. (USA) (NYSE:AGU) sells more nitrogen than potash and phosphate combined. Further, Agrium gets 10% revenue from potash. Taking these factors into account, I feel Agrium might be successful in proving analysts wrong with their tepid outlook.

Foolish takeaway

So while investors of CF and Agrium Inc. (USA) (NYSE:AGU) have reasons to be excited, Potash Corp./Saskatchewan (USA) (NYSE:POT) investors needn’t sulk. Despite the headwinds, one thing’s clear: This will be a better year for the company than 2012, at least in terms of performance. Stock prices should ideally follow suit, which makes PotashCorp good enough to have on your stock watchlist. Click here to add it.

Neha Chamaria has no position in any stocks mentioned. The Motley Fool owns shares of CF Industries Holdings.

The article How to Dig Out the Real Meat From an Earnings Report originally appeared on Fool.com.

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