Agrium (AGU) Earnings Preview

AGU is set to report Q4 earnings before the market opens on Thursday with a conf call at 11:30am ET.

Segment revenues: Retail (47%), Wholesale (54%), Advanced Technologies (2%), (Other -3%).

Past Performance: The co has reported EPS results of $0.29 below to $0.12 above consensus expectations in the last four quarters. In the last quarter, the co missed by $0.08, and the stock was down 4.6% on the day.

Other fertilizer cos that have already reported include MOS, POT, TNH, TRA and BG (fertilizer is ~10% of revs). All cos beat on earnings, but BG reported a number, which included items that made the number possibly not comparable to the consensus number. POT guided Q1 and FY08 EPS above consensus. It's likely that AGU is going to continue the trend of posting an earnings surprise when considering that fertilizer cos have been enjoying major crop prices sitting at record high prices, which has allowed the farmer to spend more, and want to spend more money to help boost yields. In their wholesale group, the co has been benefiting from higher selling prices in nitrogen, potash, and phosphate. Additionally, it has seen an improvement in its international volumes in its potash segment. Overall, the co will continue to benefit from record high commodity prices, especially from corn since corn requires a greater amount of fertilizer use over other major crops such as wheat and soybeans.

Areas of focus on the call: The USDA today released their annual projections, which goes out 10 years for major crops. And in the release the USDA projects that corn plantings will be ~88 mln acres for the 2008/09 crop season, down from the ~93.6 mln acres for the 2007/08 season. One of the most important topics the co can discuss is how this is going to affect their business going forward; another important topic is selling prices for nitrogen, potash, and phosphate; international volumes; ability to pass along higher input costs. Stock Action: Since last quarter, the stock is up 4.8%. Since the beginning of 2008, the stock is down 12.1%.