While personally I am not worried about the longer term performance of giant Ag Coop CHS (untraded), but the short term outlook remains dicey.
CHS has just filed their earnings for the quarter ending 11/30/2019 and there isn’t a sector that they operate in that is showing strength.
Obviously the agriculture sector has been hammered pretty good and to derive a hefty chunk of revenue from this area makes for dicey earnings. The coop reported a pretax loss in the ag segment of $13.9 million compared to the year ago report of a pretax profit of $80.3 million.
The coop has been propped up in recent quarters with stellar energy segment earnings, but these are now softening with pretax earnings of $162 compared to a year ago pretax profit of $232 million.
Earnings in their smaller segments of grain milling and nitrogen production also fell.
With all the above in mind I note that the company had a total net profit for the quarter of $177 million–which is a decent chunk of change, but it pales as compared to the year ago number of $347 million.
I like to look at depreciation (a non cash charge against earnings) to see what type of free cash they generate and they show $136 million in depreciation which when added to $177 million means they had free cash generation of $310 million (just a quicky look at cash generation and not meant to be a total look at cash flows).
As you all know CHS has 5 issues of perpetual preferreds outstanding which can be seen here. Quarterly dividends on the preferreds are about $42 million–so dividends are not now–and won’t likely be affected by the downward trend in earnings.
The preferred stock issue have not reacted whatsoever to the earnings which is no surprise as they seem to always trade strongly.
The earnings release from the company can be read here.
Thanks to Affinity4Investing for being right on top of this earnings release.