Terra Nitrogen Shares Dropped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: So far today, shares of Terra Nitrogen (NYS: TNH) have swung from as high as an 8% gain, to as low as a 12% loss in comparison to yesterday's closing price. Don't you just love rollercoasters?

So what: The fertilizer producer reported earnings last night, announcing earnings per "common unit" of $3.95, a 78% improvement over last year's Q2. The limited partnership immediately announced it will pay out $3.75 of that as cash distributions to its owners.

Now what: Terra's bumper crop of Q2 earnings has the stock selling for about 4.2 times trailing earnings today -- a sizeable discount to the P/Es at non-limited partnership-rivals CF Industries (NYS: CF) and Agrium (NYS: AGU) . Wall Street doesn't say how fast it expects the company to grow earnings, but right now, today, it looks pretty cheap to me.

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At the time thisarticle was published Fool contributorRich Smithdoes not own (or short) shares of Terra Nitrogen. The Motley Fool has adisclosure policy.Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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