Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Rentech Nitrogen Partners (NYSE: RNF) is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Nitrogen-based fertilizers have been all the rage lately, as low natural-gas prices have made them much more cost-efficient than competing products. Rentech Nitrogen is one of the big up-and-coming players in the industry. Let's take an early look at what's been happening with Rentech Nitrogen Partners over the past quarter and what we're likely to see in its quarterly report on Tuesday.

Stats on Rentech Nitrogen Partners

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$70.6 million

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Will Rentech Nitrogen Partners make its earnings grow?
Analysts have slashed their calls on Rentech Nitrogen over the past few months, with earnings-per-share estimates for 2012's fourth quarter falling $0.28 and full-year 2013 calls dropping $0.24. Yet those negative calls haven't held the stock back from posting a modest 4% rise since mid-December.

The drop in analyst calls came directly as a result of Rentech Nitrogen's announcement three months ago, in which the company trimmed its earnings estimates for full-year 2012. Citing $5.1 million in lost income and costs from unscheduled maintenance and downtime at its East Dubuque facility, as well as $6.5 million in costs related to an acquisition, Rentech Nitrogen reduced its calls on both EBITDA and distributable cash per share, which is a very important metric for investors given Rentech Nitrogen's status as a master limited partnership.

Yet overall, Rentech Nitrogen is still benefiting from the cost advantage that cheap natural gas gives nitrogen-fertilizer producers. Terra Nitrogen (NYSE: TNH) has maintained healthy distribution yields of more than 6% based largely on low input costs, but it can't compare to Rentech Nitrogen's 8% yield. Although rival CVR Partners (NYSE:UAN) may benefit when natural-gas prices increase, since it has its own supply of input fuel to rely on in addition to sporting a solid 7.4% distribution yield.

Eventually, a threat may come from potash producers. Both PotashCorp (NYSE:POT) and Mosaic (NYSE:MOS) have struggled from adverse conditions in the potash-fertilizer market, but recent deals with Chinese buyers could help reduce a long-standing potash glut and make those companies more competitive.

In its quarterly report, look for more guidance on how Rentech Nitrogen is positioning itself to handle natural-gas prices that have already doubled from their low mid-2012 levels. Although few expect gas to rise much further, it's still a long-term concern that the MLP needs to address in order to keep investor confidence high.

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In a previous version of this article, CVR Partner’s distribution yield was incorrectly stated. The Motley Fool regrets the error.

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