Kevin Stanley
Long/short equity, event-driven, research analyst, CFA

Compass Minerals: Earnings Leverage With A Pinch Of Salt

Executive Summary

Led by a clearly better than average 4Q13 winter season and a strong 1Q14 start, Compass Minerals (NYSE:CMP), the leading North American highway deicing salt supplier, now has multiple means upon which to improve operating earnings in the coming years. While, the current 2014 EBITDA consensus estimate for CMP implies little to no growth in the year ahead, we see close to 25% upside to the consensus estimate and a $100 stock price using the current EV/EBITDA multiple, implying nearly 30% upside to the share price. These estimates could prove conservative as volume improvements increase asset utilization rates, creating the potential for material operating margin expansion. 4Q13 earnings results are due Monday, Feb. 10 (market close)...

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