Fertilizer firm Potash Corp. of Saskatchewan (NYSE: POT) reported today that its fourth-quarter profit more than doubled, boosted by higher prices, but the firm warned that first-quarter and 2009 earnings will fall short of analysts' expectations. For the recently concluded quarter, POT banked a profit of $788 million, or $2.56 per share, on sales of $1.87 billion. Ahead of the report, Wall Street was expecting earnings of $2.28 per share on revenue of $1.82 billion.
Going forward, Potash Corp. said that 2009 potash shipments will be flat to slightly lower than 2008 levels, though it expects demand will gradually recover during the second half of the year. As a result, the company expects a first-quarter profit of 70 cents to $1 per share, and full-year earnings of $10 to $12 per share. Both figures fall woefully short of analysts' consensus estimates, which call for a first-quarter profit of $1.81 per share and 2009 earnings of $12.72 per share.
The shares gapped sharply lower at the open as investors panned POT's tepid forecast, but the stock has since galloped its way back into positive territory. The equity is maintaining its foothold atop newfound support from its 10-week moving average, which has contained all of its weekly closings since mid-December.
Despite POT's rebound on the charts today, some investors may still be feeling skeptical -- new put positions are being added today at the deep out-of-the-money March 50 strike. So far, this option has seen 20,160 contracts cross the tape on open interest of 3,326.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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