We have retained our Neutral recommendation on leading
). We remain on the sidelines factoring in the soft pricing
environment and somewhat weak overseas demand for potash and
phosphate in the near-term.
Adjusted earnings of $2.16 per share for fourth-quarter 2012,
posted on Feb 21, comfortably beat the Zacks Consensus Estimate
of $2.02. Revenues rose around 3% year over year to $3,261
million and beat the Zacks Consensus Estimate of $3,116
The results were aided by higher sales of crop protection
products and crop nutrients. However, weak global demand hurt
potash and phosphate sales in the quarter.
Agrium stands to gain from rising crop prices and overall strong
fundamentals for the agriculture and crop input market. The
company follows a strategy to grow along the value chain through
a combination of acquisitions and organic development.
The acquisition of AWB has expanded Agrium's Retail division and
provided access to the growing Southeast Asia market. Moreover,
the acquisition of Viterra Inc's agri-products business is
expected to support its earnings in 2013. However, Agrium will
not acquire Viterra Inc's 34% stake in the Medicine Hat nitrogen
) has agreed to buy the same.
Agrium expects high crop prices and tight grain inventories to
create higher demand for its nutrients. It envisions strong
demand for top quality seeds in the 2013 growing season. Agrium
is also expected to benefit from healthy demand for urea in India
However, demand for potash and phosphate is expected to be weak
in some of the key overseas markets, especially India. Changes in
pricing and subsidy policies by the Indian government are
expected to continue to affect demand in the country.
Moreover, the pricing environment for phosphate is expected to
remain soft in first-quarter 2013. The global phosphate market is
expected to remain weak in the near term, partly due to lower
demand from India (a major phosphate import market).
Agrium currently carries a short-term (1 to 3 months) Zacks Rank
Other Stocks to Consider
Other fertilizer companies having favorable Zacks Rank are
Rentech Nitrogen Partners, L.P.
). Both hold a Zacks Rank #2 (Buy).
AGRIUM INC (AGU): Free Stock Analysis Report
CF INDUS HLDGS (CF): Free Stock Analysis
MONSANTO CO-NEW (MON): Free Stock Analysis
RENTECH NITROGN (RNF): Free Stock Analysis
To read this article on Zacks.com click here.