Bear of the Day: Rentech (RTK) - Bear of the Day
August 02 2013 - 2:47AM
Zacks
Rentech (RTK) is seeing estimates for 2013 slide deeper and
as a result it is a Zacks Rank #5 (Strong Sell). It is the Bear of
the Day.
Moving to the NASDAQ Capital Market
Yesterday, the company announced that it will transfer its
listing from the NYSE to the NASDAQ Capital Market effective with
the start of trading on August 13, 2013. Rentech will continue to
trade under its existing ticker symbol "RTK." Rentech's common
stock will trade on the NYSE MKT until the close of trading on
August 12, 2013.
Company Description
Rentech engages in the sale of natural-gas based nitrogen
fertilizer products in the United States and Brazil. Its products
include ammonium sulfate, sulfuric acid, and ammonium thiosulfate
used in the production of corn, soybeans, potatoes, cotton, canola,
alfalfa, and wheat. Rentech, Inc. was founded in 1980 and is based
in Los Angeles, California.
Earnings History
Over the last six earnings reports, the RTK hasn't done so well.
I see one beat in for the September 2012 quarter. There were two
earnings meets and three earnings misses.
Two of the three earnings misses have been the last two reported
quarters. The negative earnings surprises both came with Wall
Street looking for the company to report either a gain or a
breakeven quarter, and both times the company reported a loss in
the quarter.
Earnings Estimates Not Growing
Estimates for RTK have declined of late. The 2013 estimates are
moving lower, but not by that much. Peaking at $0.14 in March they
have ticked lower to $0.07 in April. They have since slide to
$0.02.
The 2014 Zacks Consensus Estimate seen a more dramatic collapse,
with estimates moving from $0.26 in June to $0.14 at the current
level.
Valuation
The valuation picture for RTK is off the charts. By off the
charts I mean that the industry averages are negative, not allowing
for a proper comparison. Still the 107X trailing PE is huge, but
bigger still is the 142.7x forward PE. The Price to book multiple
of 2.6x is a good sized premium to the industry average of 1.9x.
The price to sales metric has the company trading at 1.7x vs the
1.1x for the industry.
The Chart
The price and consensus chart really tells the story here as the
estimate lines for 2013 and 2014 have recently taken a nosedive.
That dive lower in estimates comes a little after the stock fell
from $3 to $2.25. The problem is, estimates may still fall further,
which will lead to lower stock prices.
![](http://staticzacks.net/images/zacks/blogs/1375386271_scaled_425.jpg)
Brian Bolan is a Stock Strategist for Zacks.com. He is the
Editor in charge of the Zacks Home Run Investor service, a Buy and
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