Compass Minerals may very well be a winner from this yr’s chilly winter, per JPMorgan. Analyst Jeffrey Zekauskas upgraded the inventory to chubby from impartial. He additionally raised his goal worth by $2 to $15 per share, which suggests 25.3% upside potential from Tuesday’s shut. Compass Minerals has struggled of late, with a number of “enterprise dislocations that haven’t turned in a optimistic course” over the previous 5 years — which have dragged down the inventory by round 83% over the interval. The corporate was additionally fined and sued by the Securities and Alternate Fee for deceptive traders. On high of that, it deserted efforts to turn out to be a lithium producer, had high quality points after buying flame retardant firm Fortress and removed its dividend early final yr. Most not too long ago, administration lowered its earnings steerage for the total yr. CMP 5Y mountain CMP 5-yr chart Nonetheless, Zekauskas believes Compass stands to learn from an enhancing stability sheet and chilly winter. Compass’ core enterprise is salt for ice and snow administration on the roads within the U.S. and Canada, he famous. “Heat climate in October and November led to earnings weak spot within the December quarter (1Q:F25) and so a extra conservative strategy to annual earnings for F2025,” Zekauskas wrote in a notice on Wednesday. “January, nevertheless, has been an above-average snow month, inventories at depots within the South have been depleted, and climate has been chilly throughout the Midwest and Northeast. The chilly climate, ought to it proceed, positions the corporate effectively for higher earnings later in F2025 and maybe in F2026,” he added. The analyst additionally thinks Compass may hit optimistic free money stream this yr because it brings down its inventories. This might additionally function the inspiration for earnings development in 2026, he added. “Compass was producing adverse money stream as its inventories constructed up throughout a two-year interval of unseasonably heat climate and it invested in exploring a lithium alternative. Money stream and free money stream is able to being generated as extra inventories are labored decrease and value positions are improved,” Zekauskas mentioned. Shares climbed greater than 4% Wednesday earlier than the bell.
