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Compass Minerals Down to Strong Sell on Weak Q4, Outlook

Zacks Investment Research downgraded Compass Minerals International Inc. CMP to a Zacks Rank #5 (Strong Sell) on Apr 7, 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?

Market sentiments have been against Compass Minerals International since the beginning of 2016, as evident from the 8.3% fall in the company’s share price to date. The company’s financial performance in fourth-quarter 2015 also failed to lift investors’ sentiments as the stock has been down nearly 3.6% since Feb 8.

Last quarter, Compass Minerals International’s earnings of $1.72 per share decreased 27.7% from the year-ago tally of $2.38 per share but surpassed the Zacks Consensus Estimate of $1.38. Revenue declined 33% year over year triggered by mild winter weather conditions and weakness in agricultural market. For 2016, Compass Minerals International anticipates weakness in the agricultural market and negative impact of a strengthening U.S. dollar to affect its plant nutrition business.

Disappointing quarterly results as well as anticipated headwinds have made investors cautious about Compass Minerals International’s prospects. Over the last 60 days, the Zacks Consensus Estimate for earnings has fallen 15.9% to $3.87 per share for 2016 and 6.9% to $4.75 per share for 2017. Also, the company has an Earnings ESP of -9.56% for 2016.

Stocks to Consider

Though Compass Minerals International with a current market capitalization of $2.3 billion is off investors’ radar, there are some chemical stocks with higher investment values. Better-ranked stocks include Arkema S.A. ARKAY, Sinopec Shanghai Petrochemical Co. Ltd. SHI and The Dow Chemical Company DOW. While Arkema S.A. sports a Zacks Rank #1 (Strong Buy), both Sinopec Shanghai Petrochemical and The Dow Chemical Company carry a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
DOW CHEMICAL (DOW): Free Stock Analysis Report
 
COMPASS MINERLS (CMP): Free Stock Analysis Report
 
ARKEMA-ADR (ARKAY): Free Stock Analysis Report
 
SHANGHAI PETROC (SHI): Free Stock Analysis Report
 
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