Which 4 Fertilizer Stocks Have the Strongest Earnings Trends?

Earnings trends are extremely important when evaluating stocks. At Wall St. Cheat Sheet, we view increasing earnings quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. Then we like to analyze whether the company is outperforming peers in the sector. This is what we call the “E-Squared” investment analysis (‘E = Earnings Are Increasing Quarter-Over-Quarter’ + ‘E = Excellent Relative Performance Versus Peers and Sector’).

Stocks with improving earnings metrics are worthy of your extra attention. Click here to discover our CHEAT SHEET stock picks now!

Here’s your Cheat Sheet to how the top 4 fertilizer stocks rank via earnings trends:

4) The Mosaic Company (NYSE:MOS)

Fiscal Year 2008 2009 2010 2011 2012
Revenue ($) in millions 9,813 10,300 6,759 9,938 11,110
Diluted EPS ($) 4.67 5.27 1.85 5.62 4.42

When looking at Mosaic’s earnings in the big picture, we see an up-down-up trend. During that time, the stock has been volatile yet remained fairly stable through 2012.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Nov. 30, 2011 Feb. 29, 2012 May. 31, 2012 Aug. 31, 2012 Nov. 30, 2012
Revenue ($) in millions 3,014 2,190 2,820 2,505 2,536
Diluted EPS ($) 1.40 0.64 1.21 1.01 1.47

From this vantage point, Mosaic is erratic and higher risk. Earnings per share have been all over the place lately, and barely up quarter-over-quarter. We prefer to see earnings strongly increasing quarter-over-quarter as a simple way to gauge whether costs and the business model are stable. In this case, Mosaic doesn’t pass our test at the moment. The following stocks have been stronger…

3) Potash Corp. of Saskatchewan (NYSE:POT)

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 5,234 9,446 3,977 6,539 8,715
Diluted EPS ($) 1.133 3.64 1.08 1.95 3.51

Potash Corp. of Saskatchewan got crushed during the Crash of 2008, but has recovered in a world-class way. Three years of increasing earnings is an excellent sign the company has been managed well.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 2,321 1,865 1,746 2,396 2,143
Diluted EPS ($) 0.94 0.77 0.56 0.60 0.74

This data is a bit less impressive when you consider the drop from last September to this September. We’d keep that as a footnote to the otherwise strong three quarters of earnings growth.

2) Agrium (NYSE:AGU)

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 5,270 10,030 9,129 10,740 15,470
Diluted EPS ($) 3.28 8.34 2.33 4.52 8.68

Another fertilizer company that took a round trip from 2008 to 2011. Agrium has been very strong since falling off a cliff in 2009.

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 3,141 3,177 3,629 6,834 2,962
Diluted EPS ($) 1.85 1.20 0.97 5.44 0.80

Agrium fails our test for increasing earnings quarter-over-quarter. Moreover, earnings has been in a downward trend three of the four most recent quarters. This adds some risk to this stock for shorter term investors.

1) Terra Nitrogen (NYSE:TNH)

Fiscal Year 2007 2008 2009 2010 2011
Revenue ($) in millions 636.31 903.00 507.70 564.60 798.90
Diluted EPS ($) 10.90 14.90 5.40 8.01 15.33

The strongest earnings trends in the fertilizer sector are courtesy of Terra Nitrogen. The company has nearly tripled EPS over the past three years. That’s a nitro boost!

Next, our CHEAT SHEET investing framework asks us to drill down to the recent quarterly data:

Quarter Sep. 30, 2011 Dec. 31, 2011 Mar. 31, 2012 Jun. 30, 2012 Sep. 30, 2012
Revenue ($) in millions 203.30 201.00 196.90 195.60 181.10
Diluted EPS ($) 3.91 3.87 3.78 4.67 4.00

Quarterly earnings are more stable than other companies on this list. However, quarterly earnings are in a downtrend. Therefore, prudent investors should remain cautious until the company can beat EPS quarter-over-quarter.

“E = Earnings Are Increasing Quarter-Over-Quarter” is a core component of our successful CHEAT SHEET investing framework. Don’t waste another minute — click here to discover our CHEAT SHEET stock picks now!