Compass Is Headed in the Right Direction
The wide-moat company's progress on its Goderich mine operations is encouraging.
Compass Minerals (CMP) announced 2018 fourth-quarter snow data and provided general guidance on fourth-quarter salt sales volume. However, our key takeaway from this update was that the company was able to improve production at its low-cost Goderich mine. This news is in line with our thesis that the company will be able to fully ramp up production at Goderich and implement the new continuous miners throughout the mine to restore profitability. While management provided only directional commentary, we are encouraged by the announcement and expect more details during the fourth-quarter earnings call in February.
With our long-term outlook intact, we maintain our $81 fair value estimate for Compass Minerals. Our wide economic moat rating based on the company’s cost-advantaged salt production is also unchanged. At its current price, Compass is trading 45% below our fair value estimate.
Seth Goldstein does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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