Zacks Investment Research downgraded Compass Minerals International Inc. CMP to a Zacks Rank #5 (Strong Sell) on Jan 12, 2016. Going by the Zacks model, companies holding a Zacks Rank #5 have strong chances of underperforming the broader market over the next few quarters.
Why the Downgrade?
Compass Minerals International failed to impress investors in 2015, as evident from an annual return of negative 10.6%. For the first three quarters of 2015, the company surpassed expectations in one and lagged in the other two. For the fourth quarter, the Earnings ESP is currently pegged at -40.19%, while the same stands at -12.37% for 2015 and -18.72% for 2016.
We anticipate Compass Minerals International’s fourth-quarter top-line performance to be hurt by reduced demand for the company’s deicing products. Recently, the company disclosed that reduced winter weather events in its North American service area (roughly 64% below the 10-year average) had lowered salt demand. Also, the company is facing headwinds in its agricultural end-markets.
Bleak prospects have made investors doubtful regarding Compass Minerals International’s performance in the quarters ahead. Over the last 60 days, the Zacks Consensus Estimate for the stock has decreased 10% to $4.85 per share for 2015 (results yet to be released) and by 5.4% to $5.29 for 2016.
Stocks to Consider
Compass Minerals International currently has a market capitalization of $2.4 billion. Better-ranked stocks in the chemical industry include Koninklijke DSM N.V. RDSMY, Stepan Company SCL and Axiall Corporation AXLL. While both Koninklijke DSM and Stepan Company sport a Zacks Rank #1 (Strong Buy), Axiall Corporation carries a Zacks Rank #2 (Buy).
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Click to get this free report COMPASS MINERLS (CMP): Free Stock Analysis Report STEPAN CO (SCL): Free Stock Analysis Report KONINKLIJKE DSM (RDSMY): Free Stock Analysis Report AXIALL CORP (AXLL): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research