Compass Minerals International (CMP) AI Stock Analysis

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Compass Minerals International

(NYSE:CMP)

48Neutral

Compass Minerals International's overall score reflects significant financial challenges, including declining revenue, negative profitability, and high leverage. While technical indicators show some positive momentum, the valuation metrics are concerning, with a negative P/E ratio and no dividend yield. The earnings call presented a mixed picture, with improvements in the plant nutrition segment overshadowed by a slowdown in the salt business and reduced EBITDA guidance. Strategic improvements are essential for enhancing financial health and stock performance.

Positive Factors

Financial Improvement

Compass’ balance sheet and cash flow look to be improving, with the potential to deliver positive free cash flow in 2025 as inventories are worked down.

Investment Rating

The analyst raised the investment rating on Compass Minerals from Neutral to Overweight, suggesting confidence in future performance and valuation.

Weather Impact

Cold weather positions the company well for better earnings later in F2025 and perhaps in F2026 as inventories are depleted due to higher demand for salt.

Negative Factors

Debt

There is a need for the company to imminently refinance its debt as leverage is near covenants.

Earnings

The company's Q1 EBITDA significantly missed consensus expectations, indicating operational challenges.

Regulatory Issues

The company was fined by the SEC for misleading investors and was subsequently sued, which may impact its reputation and financial standing.

Compass Minerals International (CMP) vs. S&P 500 (SPY)

Market Cap

$519.63M

Dividend Yield1.61%

Average Volume (3M)635.32K

Price to Earnings (P/E)―

Beta (1Y)1.02

Revenue Growth-9.30%

EPS Growth-136.46%

CountryUS

Employees2,000

SectorBasic Materials

Sector Strength60

IndustryIndustrial Materials

Share Statistics

EPS (TTM)-3.73

Shares Outstanding41,504,100

10 Day Avg. Volume629,788

30 Day Avg. Volume635,317

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.38

Price to Cash Flow (P/CF)-25.20

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$15.00

Price Target Upside19.81% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Compass Minerals International Business Overview & Revenue Model

Company DescriptionCompass Minerals International, Inc. is a leading producer of essential minerals, primarily focused on salt, plant nutrients, and specialty chemicals. The company operates in sectors such as agricultural, food, and water treatment industries. Its core products include deicing salt for highway and consumer use, sulfate of potash for specialty fertilizers, and other mineral-based products.

How the Company Makes MoneyCompass Minerals International generates revenue through the production and sale of three main product lines: salt, plant nutrition, and specialty chemicals. The salt segment, which includes highway deicing and consumer and industrial salt, is a major revenue driver, particularly during winter months when demand for deicing products peaks. The plant nutrition segment focuses on producing sulfate of potash, a premium fertilizer component used in high-value crops. Specialty chemicals include magnesium chloride and other products used in various industrial applications. The company's revenue is also supported by long-term contracts and strategic partnerships with government entities and private sector clients, ensuring consistent demand and stable cash flow.

Compass Minerals International Financial Statement Overview

Summary

Compass Minerals International is facing significant financial challenges characterized by declining revenue and negative profitability metrics. The high debt-to-equity ratio indicates significant leverage, and the negative cash flow further underscores the need for strategic improvements.

Income Statement

Neutral

Compass Minerals International has faced significant challenges in its recent performance with a negative TTM net income and declining revenue. The company's TTM gross profit margin is 17.4%, which reflects a decrease from previous years. The net profit margin has turned negative, indicating issues with profitability. Additionally, the EBIT and EBITDA margins are negative, implying operational difficulties.

Balance Sheet

Neutral

The balance sheet reveals a high debt-to-equity ratio, indicating significant leverage with a ratio of 2.90. This could pose risks if earnings do not improve. The equity ratio is 19.3%, suggesting moderate financial stability. Return on equity is negative due to the net losses, highlighting the need for improved profitability.

Cash Flow

Negative

The cash flow statement shows negative free cash flow growth, with a decline from the previous year. The operating cash flow to net income ratio is concerning due to negative net income. The company needs to enhance its cash generation capabilities to improve financial flexibility.

TTM	Sep 2024	Sep 2023	Sep 2022	Dec 2020	Dec 2019
Breakdown
Income Statement		Total Revenue
1.08B	1.12B	1.20B	1.24B	1.49B	1.49B
	Gross Profit
158.20M	195.00M	233.90M	198.00M	336.80M	293.90M
	EBIT
-62.70M	-116.80M	79.10M	-74.30M	163.60M	130.30M
	EBITDA
46.40M	-13.70M	90.70M	39.40M	153.00M	277.00M
	Net Income Common Stockholders
-154.40M	-206.10M	15.50M	-36.70M	59.50M	62.50M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
45.80M	20.20M	38.70M	46.10M	34.70M	27.00M
	Total Assets
1.72B	1.64B	1.82B	1.64B	2.44B	2.37B
	Total Debt
974.40M	917.50M	805.30M	947.60M	1.42B	1.36B
	Net Debt
928.60M	897.30M	766.60M	901.50M	1.38B	1.34B
	Total Liabilities
1.46B	1.32B	1.30B	1.39B	1.91B	1.83B
	Stockholders Equity
263.00M	316.60M	517.20M	257.00M	529.60M	540.20M
Cash Flow		Free Cash Flow
-24.80M	-99.80M	-48.30M	23.80M	61.50M	93.90M
	Operating Cash Flow
80.00M	14.40M	101.10M	120.50M	159.60M	190.70M
	Investing Cash Flow
-89.00M	-116.10M	-173.00M	-80.00M	-100.40M	-99.60M
	Financing Cash Flow
35.30M	83.10M	64.00M	-14.30M	-50.50M	-85.90M

Compass Minerals International Technical Analysis

Technical Analysis Sentiment

Positive

Last Price12.52

Price Trends

50DMA

10.59

Positive

100DMA

11.59

Positive

200DMA

11.64

Positive

Market Momentum

MACD

0.46

Negative

RSI

73.64

Negative

STOCH

92.87

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CMP, the sentiment is Positive. The current price of 12.52 is above the 20-day moving average (MA) of 10.35, above the 50-day MA of 10.59, and above the 200-day MA of 11.64, indicating a bullish trend. The MACD of 0.46 indicates Negative momentum. The RSI at 73.64 is Negative, neither overbought nor oversold. The STOCH value of 92.87 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CMP.

Compass Minerals International Risk Analysis

Compass Minerals International disclosed 35 risk factors in its most recent earnings report. Compass Minerals International reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Compass Minerals International Peers Comparison

Overall Rating

UnderperformOutperform

Sector (49)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GSM	63 Neutral	$698.93M	134.41	0.67%	1.42%	-0.37%	-94.30%
UAMY	57 Neutral	$389.75M	―	-6.39%	―	71.84%	72.93%
Sector *	49 Neutral	$1.95B	-1.59	-21.99%	3.77%	0.61%	-27.45%
CMP	48 Neutral	$519.63M	―	-42.75%	1.61%	-9.30%	-136.46%
TMC	44 Neutral	$1.09B	―	-667.42%	―	―	-3.49%
LZM	38 Underperform	$246.06M	―	-814.96%	―	―	―
IPX	35 Underperform	$672.97M	―	-40.55%	―	―	-15.85%

* Basic Materials Sector Average

Performance Comparison

CMP

Compass Minerals International

12.52

-0.82

-6.15%

GSM

Ferroglobe

3.72

-1.52

-29.01%

UAMY

United States Antimony

3.40

3.18

1445.45%

TMC

TMC the metals company Inc.

3.05

1.42

87.12%

LZM

Lifezone Metals

3.65

-3.70

-50.34%

IPX

Iperionx Ltd. ADR

21.23

7.46

54.18%

Compass Minerals International Earnings Call Summary

Earnings Call Date: Feb 10, 2025 | % Change Since: 3.30% | Next Earnings Date: May 13, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strategic leadership changes and improvements in the plant nutrition segment. However, these were offset by declines in salt business revenue and overall consolidated revenue. Adjusted EBITDA guidance was reduced due to slower sales in the salt segment. Cost control measures and liquidity management were positive, yet concerns regarding tariffs and production costs remain.

Highlights

Senior Leadership Additions

Compass Minerals announced the addition of Pat Merritt and Peter Feldman as COO and CFO, respectively, bringing proven track records in operational management to the company.

Progress in Salt Inventory Management

North American Highway Deicing inventory volumes are targeted to be down approximately 10% year over year, despite a slow start to winter.

Improvement in Plant Nutrition Business

Plant nutrition revenue increased by 24% year over year, with sales volumes up 36% and costs down 10%, leading to an increase in guidance for this segment.

Liquidity and Leverage Management

At quarter-end, liquidity was $126 million, and the consolidated net leverage ratio was within the company's covenant at 5.9 times.

Lowlights

Decrease in Salt Revenue and Volumes

Salt business revenue decreased to $242 million from $274 million a year ago, with volumes down 13% and operating earnings per ton down by 34%.

Overall Revenue Decline

Consolidated revenue was $307 million, down 10% year over year, partly due to the absence of contribution from the Fortress US Forest Service contract.

Adjusted EBITDA Guidance Reduction

The company reduced the range for total adjusted EBITDA by roughly $15 million due to a lighter start in sales in the salt business.

Accounts Receivable Increase Due to Product Recall

Accounts receivable was affected by a $35 million gross-up related to a product recall and insurance claim.

Company Guidance

During the Compass Minerals First Quarter Fiscal 2025 Earnings Conference Call, the company provided detailed guidance for the fiscal year. Compass Minerals revised their total adjusted EBITDA guidance down by approximately $15 million due to a slower start in their salt business, attributed to mild weather in October and November. Conversely, they increased their plant nutrition segment guidance by about $4 million due to stronger sales volumes and lower costs. The firm maintained their corporate EBITDA guidance from December and reduced their capital expenditure guidance by $45 million, citing a more disciplined capital management approach. They aim to reduce North American highway deicing salt inventory volumes by approximately 10% year over year. For the first quarter, Compass Minerals reported consolidated revenue of $307 million, a 10% decrease year over year, and an adjusted EBITDA of approximately $32 million. The salt segment's revenue was $242 million, down from $274 million the previous year, with operating earnings per ton decreasing 34% to $11.79. In the plant nutrition segment, revenue increased by 24% year over year. The company highlighted their focus on continuing to improve operational efficiencies and the progress in restoring their SOP pond complex, which positively impacted their cost structure. They also discussed potential impacts of a paused U.S. tariff on Canadian imports and its implications for their salt and SOP businesses.

Compass Minerals International Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Compass Minerals Announces New COO and CFO Appointments

Neutral

Jan 28, 2025

On January 27, 2025, Compass Minerals International appointed Patrick Merrin as the new Chief Operations Officer and Peter Fjellman as the new Chief Financial Officer. Merrin, with three decades of experience in the mining industry, is set to begin his role on March 3, 2025, while Fjellman, who has extensive experience in finance, assumed his position immediately following the resignation of former CFO Jeffrey Cathey for personal reasons. These leadership changes are expected to support Compass Minerals’ commitment to operational management and financial efficiency across its global operations, ensuring continued performance and improvement.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.