2015 corn plantings will be lower than 2014, which was lower than 2013. Unless the fertilizer companies are ratcheting down supply, which i doubt, this also puts pressure on pricing. Hoping for an acquisition is not the best investment thesis. It's a fool's errand. Stick to the fundamentals. Good luck.
volume of corn plantings won't be down much, watch and see!
but margins will be greatly increased plus CF has publicly came out and said they want to buy out company in nitrogen market. RNF is perfect fit and is ripe to with kicking out top guy and hedge funds on board that want to sell it.
Wrong. Fundamentals are still extremely weak. The more important factor is where corn prices are going to be at. We've had two record years of production. In 2014, we already had less corn plantings than 2013, but yields were much higher than expected and thus production was even higher than the 2013 record production. You can bet that 2015 will be an even lower planting year. And so we'll get lower volume for nitrogen fertilizer and bias to pricing to the downside. Demand for corn hasn't trended up with supply, thus the collapse in corn price. There is a lot global corn supply, which has slowed U.S. exports. Corn break even level is $4.50/bushel roughly, and 2014 prices on average were at $3.70. The outlook is for $4 corn next year. I wouldn't bet on huge margin gains on $4 corn.
And we don't even know where nat gas will go next year. Sure, it's now lower than the early 2014 peak, but who is to say that it won't happen again. And will RNF panic again and lock in 2015 production at the peak? All we need is a really cold winter. The only potential positive out of this is that this may prevent some of the future nitrogen fertilizer capacity build expected in the out year.
sorry but fundamentals point to big earnings and distributions for 2015. Gas hedge here was 5+ thru end of year, next year they will get gas at 3.70, what a big increase in margins that will provide along with all the improvements they capitalized on to improve efficiency at plants.
More importantly, look at what the 2015 estimates were before today. It was above $1.50 over 3 months ago, and much higher 6 months ago. Then again, so was the stock price. Like I've said before, and this only confirms it, analysts don't like to put sell ratings on stocks. To keep RNF at a Hold/Neutral they need to justify a target price that is within the current price. Most analysts base their price targets on forward year cash distributions (which resembles earnings) and an implied yield. Easier to inflate earnings than the yield, especially if we are talking about forward year earnings. Hold/Neutral is essentially a Sell.
Look at 2014 earnings estimates. At 0.85, was at 1.08 3 months ago. And again, it was a lot higher over 3 months ago. Probably closer to 1.50. True earnings power of RNF is not going to be higher than $1, based on industry fundamentals and company-specific issues at RNF.
analyst are increasing earnings estimates here to 1.33 next year which is up from .88 this year. some of that is because margins will increase due to much lower nat gas prices and some because prices received for nitrogen will be up. Who to believe, analyst who follow industry for living or joe Smo on message board....hmmm! Selling at year end is tax loss selling as stock is way down, so i don't read much into the gyrations going on in december.
let me jump back in and just state one thing. Farmers have a choice of what to plant. They have learned not to plant corn two years in a row. Soybeans on the other hand do not need all that nitrogen, as all legumes. Look it up...very interesting. Corn is the big nitrogen user and corn to make biofuels have been the driving force for RNF last year. Corn also hit $8 due to drought and farmers planted the living daylights out of it.....record amounts. Now at $4...they will plant less. Soybeans are going in...and demand for nitrogen is lower. Hence the complete collapse of this stocks price, profits, and hence...the dividend. It will return one day.
The departure of HR could only halt the RNF march to oblivion for a day. Crashed through the $9 barrier. Watch out below. I am expecting Karen to do another recommendation any time now.
what's happening to the PPS now that they finally got rid of that piece of worthless gutter trash Assbottom... I hope He looks at the PPS today to get a better feel for what the investment community really thinks about his abilities as a CEO___ More importantly, I hope this prevents him from taking his poison to another company...
Sentiment: Strong Buy
Thanks. Low 20's looks really good now and now with the CEO gone, maybe buyers coming in. Will be interesting to watch the price/vol action. May be a tell on the buyout. I've heard the CF buyout speculation from others also.