dwlima

Potash and Agrium Targets Slashed - UBS Analyst

Analysts change estimates to promote stock trading and have an excuse to have an office. Anyone that knows anything about DCF or other valuation techniques knows that you could change estimates each day based on the the way the wind is blowing. Don't let Wall Street keep sucking you in and then out....do your own research if you know how or buy ETFs if you don't.

DWLima

Is Fertilizer Starting to Stink?

"...but it's difficult to say how much of the current drop is really about the event - the strike" I would have to say none of the current drop is about the strike. POT's comparables (MOS, AGU, etc.) have declined a similar percentage and do not have laborers on strike. The fundamentals remain strong (supply coming on-line slowly compared to the rising demand) and the spot price for Potash has remained stable while input costs (energy) have decreased.

The stock's decline is due to the "protect the profits" mentality that is moving to a "stop the bleeding" mentality. In a situation where the float is large (no one in control), this type of stock action occurs. Until potash prices decrease significantly, this stock will rise significantly.

Last quarter the firm earned $2.82 per share and increased guidance. Assuming stable earnings at $2.82 per share, you have almost $12 per share per year in earnings or a P/E of 12. You mention historical P/Es, and you will see that POT historically traded with a P/E over 12.