Snow Scarcity Dings Compass Minerals

Snow has been scarce in

As one might expect, Compass' stock price has reacted unfavorably to the lack of snow. The stock is down more than 15% since the end of January. But we take a long-term perspective and view this move as an overreaction. We think Compass is well positioned for an eventual return to more normal winter conditions. As such, our long-term expectations for the company remain largely intact. We think the company's cost improvements at Goderich, which will wrap up this year, will shine through even further once the salt business gets back to a more normal operating environment. And eventually, more snowfall should also firm up salt pricing. We think patient investors who are wiling to wait on more normal snowfall will be rewarded, but predicting exactly when that payoff will come is harder to predict.

We're trimming our fair value estimate for Compass Minerals to $88 per share from $91 following a cut to our near-term cash flow forecast. Our wide moat rating for the company, based on cost advantage, is intact.

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