Terra Industries, Inc. (TRA)

ricoy5 (25.23) Submitted: 3/24/08 4:37 PM : Start Price: $36.11 TRA Score: -29.56

Terra Industries Inc. (Terra) is a producer and marketer of nitrogen products, serving agricultural and industrial markets. The CompanyG?s business is organized into two segments: Nitrogen Products and Methanol. The Nitrogen Products business produces and distributes ammonia, urea, urea ammonium nitrate solutions, ammonium nitrate and other nitrogen products to agricultural and industrial users. The Methanol business manufactures methanol, which is principally used as a raw material in the production of a variety of chemical derivatives, and in the production of methyl tertiary butyl ether (MTBE). Terra owns a 75.3% interest in Terra Nitrogen Company, L.P. (TNCLP), which, through its subsidiary, Terra Nitrogen, Limited Partnership, operates TerraG?s manufacturing facility at Verdigris, Oklahoma. The Company is the sole general partner and the majority limited partner of TNCLP. On September 14, 2007, the Company formed GrowHow UK Limited, a joint venture with Kemira GrowHow Oyj.   (from MSN)                           
With a Fcst 5y EPS growth rate of 44%, this company seems to be taking big steps in the right direction. Operating and Free Cash Flow growing at upwards of 40% CAGR last 5years, and over 50% CAGR last 3y. Capex has remained fairly level, throughout this period, and the prior growing period as well...

PE/G = .44 ; 5y ROE = 11% ; 5yROA = 3.4% ; DE= 44.8%

Valuation formulas range, mostly due to recent year neg earnings... which in all skew the averages down, which makes the good valuations more favorable (conservative)

Graham values EPS growth to be worth $101, and even with 60% MOS, the $40.63 price point is over 7% discount over todays price...
Simple EPS forecast values at over $78...
Cash flow valuations, based on a much lower 2007 number, and CAGR of only 10%, produce an intrinsic value of $27... which is lower than current price... but the imputs are much lower too... do I recalculate based on that?

the only better Ag Chem company (based on my sheets, anyhow) is TNH, which is 78% owned by TRA. The rocketing CashFlow's for both seem to graph pretty closely.

Based strictly on the numbers, this is perhaps a buy, and definately a hold... I'll have to keep looking, before I add this (as I am inclined to do), to my RL folio.

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