Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of minerals company Compass Minerals International (NYSE: CMP ) fell 18% today after the company reported earnings.
So what: Second-quarter revenue fell 3% to $173.8 million because of a drop in specialty fertilizer sales due to a constrained supply of sulfate of potash. Earnings increased 12% to $10.6 million, or $0.32 per share, which became $0.31 after excluding one-time items. That fell well below estimates of $0.40 per share in earnings from Wall Street.
Now what: Falling revenue wasn't a good sign today, and analysts at BMO Capital piled on by saying that they expect Russian potash producer Uralkali to increase supply, putting pressure on prices. The stock isn't a great deal anyway at 25 times earnings, too expensive for a stock that isn't growing. I'd stay away from the discount today and look for better deals in the mineral space.
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