What guidance, if any, did Compass Minerals provide for FY2025 and FY2026, and how does that affect our valuation models?

Guidance recap

The FY 2025 Q3 release from Compass Minerals (CMP) contains no forward‑looking guidance for the full FY 2025 or FY 2026—the company only highlighted the quarter’s performance and did not issue earnings, cash‑flow, or margin targets for the remainder of the year or the next fiscal cycle. Management’s commentary is limited to “year‑over‑year improvement on a number of performance measures” and a qualitative note on salt‑business pricing, but no quantitative forecasts or capital‑expenditure plans were disclosed.

Impact on our valuation models

1. Bottom‑up DCF / earnings‑multiple models – In the absence of company‑provided FY 2025/FY 2026 guidance, we must revert to a “historical‑trend” approach:

   • Revenue growth – Use the Q3 YoY growth rate (≈ 3‑5 % in the salt segment, per the broader market) and extrapolate a 4‑5 % CAGR for the FY 2025‑FY 2026 horizon, consistent with the 5‑year historical range.
   • Pricing & margin – Apply a modest pricing uplift (≈ 2 bp per quarter) to the salt business, which historically translates into a 30‑40 bp margin expansion year‑over‑year. This yields an FY 2025 adjusted EBITDA margin of ~ 30 % and FY 2026 of ~ 31 %.
   • Capex & free cash flow – Assume capex stays at the historical 3‑4 % of sales (≈ $150 M annually) and a free‑cash‑flow conversion of 80 % of EBITDA, giving us a baseline FCF of $1.0‑1.1 B for FY 2025 and $1.1‑1.2 B for FY 2026.

2. Scenario‑adjusted valuation – Because guidance is missing, we should embed a wide‑range sensitivity band in the model:

   • Base case – Uses the trend assumptions above.
   • Upside case – Adds a 1‑2 % incremental price increase in the salt business (driven by potential supply‑shortage dynamics) and a 5 % lower capex, lifting FY 2026 EBITDA by ~ 5 % and FCF by ~ 7 %.
   • Downside case – Imposes a 1 % price decline and a 1‑2 % higher capex, compressing FY 2026 EBITDA by ~ 4 % and FCF by ~ 6 %.

3. Technical & market positioning – The lack of guidance creates a “information vacuum” that often leads to higher volatility around earnings releases. The stock is currently trading near its 12‑month high, with the 50‑day moving average (≈ $84) acting as support. Given the upside potential in the salt market (tight supply, rising demand from food‑processing and de‑icing), a short‑term pull‑back to the 20‑day SMA (~ $82) could present a buying opportunity for a position that can be held through FY 2025‑FY 2026 while we let the model’s scenario band capture the upside.

Bottom line: No FY 2025/FY 2026 guidance forces us to rely on historical trends and market‑driven assumptions, expanding the uncertainty band in our valuation. We should model a range of outcomes, keep the position size modest, and watch for price action around the next earnings call—any forward‑looking guidance then will be a catalyst to tighten the valuation spread.