Compass Minerals Stock Soars On Reported Private Equity Interest: Retail Sentiment Brightens

Shares of Compass Minerals ($CMP) soared more than 21% on Friday following a Reuters report of a potential acquisition by private equity firms, lifting retail sentiment.

The Overland Park, Kansas-based Compass, which makes salt, sulfate of potassium, and magnesium chloride, entered talks about a potential deal after its lithium-mining project was wound down and dragged down the company’s shares, Reuters reported, citing sources.

Compass shares had lost more than half their value this year, making it an acquisition target for a potential PE deal. The company began exploring potential interest a few weeks ago and a deal is imminent though not certain, said the report.

The company will next report earnings on Nov 21. Wall Street analysts expect earnings per share (EPS) to come at -$0.44 on estimated revenues of $212.42 million.

Retail sentiment on the stock turned ‘extremely bullish’ (97/100) from ‘neutral’ (47/100) a day ago. Message volumes jumped to extremely high levels.

Reporting its preliminary fiscal Q3 2024 results in September, Compass President and CE Edward C. Dowling noted that its core salt and plant nutrition businesses were “performing well.”

“We are building and reinforcing a culture committed to operational excellence and continuous improvement, with an emphasis on improving cash generation and deleveraging the balance sheet,” Dowling said in a statement at the time.

In the third quarter, Compass reported Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of $32.8 million, up from $28.6 million in the same period last year. Its revenues of $202.0 million were roughly in line with Wall Street Estimates. Net loss per share of -$1.01 was wider than analyst expectations of -$0.74.

Compass ended its second quarter with $220.8 million of liquidity, including $12.8 million in cash and cash equivalents and $208.0 million of credit lines it has available.

Compass stock is down 41% year-to-date, even after today’s jump.

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