Compass Minerals Q4 2025 Earnings Preview: Better Fundamentals, Crowded Calls

1. Market & Expectations

Compass Minerals (CMP) heads into its fiscal Q4 2025 print with the stock sitting near the top of its recent range. Shares are around $20, up sharply year-to-date (roughly mid-double-digit gains in 2025) and well above the $8–9 lows seen in late 2024, but still far below pre-2022 peak levels. The 52-week range (~$8.6–$22.7) puts the current price in the upper quartile, so a decent amount of recovery is already in the tape.

On valuation, CMP screens cheap on sales but messy on earnings. Various data sources put price-to-sales around 0.6–0.7x and enterprise-value-to-sales in the low-single digits, despite negative trailing EPS and a leverage-heavy balance sheet. That mix (low P/S, negative GAAP profitability, higher EV/EBITDA) is textbook “value-with-hair”: there’s room for multiple expansion if the earnings story really normalizes, but there is not much margin for disappointment given the capital structure.

Street expectations for the December 8, 2025 after-close report cluster around an EPS loss of roughly -$0.15 on ~$224M of revenue. That implies a meaningfully narrower loss versus the prior year’s Q4 and low-to-mid single-digit revenue growth. Full-year estimates have also moved up in recent months; consensus now expects losses to shrink in 2025 and swing toward positive EPS in 2026, with at least one estimate set describing current-year EPS being revised higher by on the order of two-thirds over the last couple of months. The bar is not high in absolute terms (still a loss), but relative to where expectations sat earlier in the year, it’s no longer “kitchen-sink” low.

Recent earnings reactions have been choppy. In Q3 2025 CMP posted revenue ahead of consensus and year-on-year growth in both revenue and adjusted EBITDA, but EPS missed (-$0.39 vs roughly -$0.13) and the stock dropped around low-double-digits in the immediate aftermath. Over a longer sample, CMP has finished the first day after earnings down more often than up, with one statistics source flagging 7 negative reactions in the last 12 reports and a modest average one-day move (a bit larger on the downside than upside). Other pre-earnings options writeups over the last couple of years have highlighted that the median realized move over eight quarters has typically been in the low single digits.

Put together: expectations have improved (narrower loss, better EBITDA, path to positive EPS), the stock has had a strong 2025, and the tape around earnings has skewed slightly negative on average, especially when EPS has missed even as EBITDA improves.

2. Business & Balance Sheet

Compass Minerals is a two-engine story: the Salt segment (deicing and industrial/consumer salt) and Plant Nutrition (primarily sulfate of potash). Both are cyclical and weather-sensitive; Salt depends heavily on winter storms, while Plant Nutrition follows fertilizer prices and crop economics.

The 2025 story has been about operational repair. Recent quarters show:

• Revenue back to modest growth (mid-single-digits year-on-year in the latest quarter).
• Adjusted EBITDA up more strongly than revenue, as price/mix and cost control show through.
• Net loss narrowing versus prior year, but still negative on a GAAP basis.

Management has also been explicitly focused on the balance sheet. They’ve reduced net debt, trimmed capex plans, and highlighted a goal of moving leverage toward an investment-grade profile over time. Liquidity (cash plus undrawn revolver) looks adequate, but leverage metrics are still high: debt-to-equity is elevated, and debt-to-EBITDA sits in a range where any stumble in EBITDA or a mild winter can re-ignite solvency worries.

Upside, fundamentally, comes from a clean execution of this repair plan:

• Salt volumes hold up into the winter season with reasonable pricing, and logistics costs do not re-blow out.
• Plant Nutrition benefits from stable to mildly improving fertilizer pricing and volumes.
• EBITDA guidance is at least reaffirmed, if not nudged higher, confirming the trajectory to positive EPS and further deleveraging in 2026.

Downside risk is the mirror image:

• A warm early winter or pricing concessions in Salt.
• Softer potash demand that crimps volumes or forces discounts.
• Any back-tracking on EBITDA guidance or higher-than-expected interest expense.

Because leverage is still the overhang, the market is likely to be hypersensitive to anything that shakes confidence in the multi-year deleveraging path. Even an in-line quarter with flat guidance can be “not good enough” if the stock is an earnings-event momentum favorite going in.

3. Options & Sentiment

Implied earnings move vs history

From the uploaded chain (as of December 5), the most relevant expiry for the earnings event is the December 19, 2025 monthly (14 days to expiration at snapshot, and the first expiry that fully reflects the December 8 after-close report).

• Underlying CMP price: $20.29.
• ATM strike: $20.
• Dec 19 $20 call mid: $1.48.
• Dec 19 $20 put mid: $1.08.

That puts the ATM straddle at roughly $2.56, or ~12.6% of spot. In other words, options are pricing a one-day earnings move on the order of ±12–13% in either direction.

By contrast, historical realized moves have generally been much smaller:

• One options recap from late 2024 cited a median move over the prior eight quarters of only ~2–3% even when implied moves were in the low teens.
• Another pre-earnings note in 2024 saw implied moves around 3.5–4.7% against a similar low-single-digit realized median.
• Market-wide earnings move stats from one data provider show CMP with a slightly negative average one-day post-earnings move (around -1% to -2%) and relatively modest typical absolute moves, punctuated by occasional double-digit drops like Q3 2025.

Against that backdrop, a 12.6% implied move is rich: roughly 4–5x the stock’s recent non-event daily realized volatility and well above even the bigger historical earnings gaps.

Skew, OI, and flows

From the same chain:

• Across all expiries, call open interest is about 4x put OI (4,869 vs 1,231 contracts).
• Total call volume in the snapshot day (577) is nearly 3x put volume (203).
• On the Dec 19 event expiry, call positioning is even more lopsided: ~4,052 call OI vs ~1,156 put OI, and call volume of 138 contracts vs essentially no put trading.
• At the ATM $20 strike, call and put implied volatilities are identical (about 79–80%); the skew is not in IV at a given strike, but in where the open interest sits:
  • Fat OI and active trading in OTM calls (e.g., $22.5 calls with hundreds of contracts of OI and noticeable volume).
  • Meaningful, but smaller, put positioning further out in time (notably January 2026 $20 puts) that looks more like hedging than speculative downside.

The uploaded unusual-activity list reinforces this split personality: sizable trades in January 2026 $22.5 calls and $20 puts, plus fresh interest in far OTM December $27.5 calls. That’s a mix of:

• Bullish speculation / squeeze bets in upside calls, especially near the event.
• Longer-dated hedge buying in downside puts, likely from investors with existing stock exposure.

Net-net, the options tape around this earnings print looks crowded on the upside: short interest is elevated; calls are being bought aggressively and in size into the event expiry; and the straddle is expensive relative to historical delivered volatility.

Street and sentiment

Analyst and sentiment context roughly matches the options picture:

• Wall Street’s rating skew is cautious: a consensus of “Reduce” / Sell-leaning Hold, with 2 sell, 2 hold, 1 buy in one survey; Zacks recently upgraded CMP from “strong sell” to “hold,” but the broader view remains wary.
• The average 12-month price target across several aggregators is around $20, essentially flat or even a touch below the current price, with a range roughly in the high-teens to low-$20s.
• Some valuation models (relative-value and DCF-style) see CMP as materially undervalued versus peers and history, sometimes by 50–60%+ under optimistic assumptions, but those are conditional on the earnings and deleveraging story actually playing out.
• Technical/quant services flag balanced technical signals (roughly equal buy and sell signals) but note an 84%+ gain in 2025 after huge declines in 2023–24, plus short-sale activity around high teens percent of trading, suggesting both a recovery trade and an active short-seller presence.

Put it all together:

• Positioning: crowded bullish in near-term calls, with high implied vol.
• Narrative: improving operations and guidance vs an over-levered balance sheet and still-negative EPS.
• Expectations: low in absolute terms (a small loss) but much higher than a year ago, and arguably fully reflected in the YTD rally.

That is a classic setup where a merely “fine” quarter can trade badly, especially if vol has been bid and options buyers are looking for a home-run upside surprise.

4. Guidance, Direction & Confidence

Fundamental expectations

Base case on the fundamentals:

• Q4 2025 results land roughly in line with consensus on EPS and revenue.
• Management reiterates or only modestly tweaks 2026 guidance rather than raising it meaningfully again.
• Commentary remains constructive on margins and deleveraging, but there’s no new catalyst (e.g., big contract wins, a step-function guidance raise, or a transformative de-leveraging move).

In other words: the quarter likely confirms that CMP is on a repair path, but doesn’t drastically change the story that investors already know.

Price reaction scenarios

From a trading standpoint, what matters most is how that “fine but not spectacular” outcome interacts with the current setup (rich implied move, crowded upside calls, lingering leverage worries):

• Base-case reaction (our call): modest downside gap, realized move < implied.
  • CMP gaps down ~5–9% from the pre-earnings close, with a central case around -7%.
  • The move is driven less by a big miss and more by de-risking: options longs exiting, shorts partially re-loading, and investors who rode the 2025 rally taking profits into a print that is “good, but not good enough” to justify the current vol and upside speculation.
• Bullish surprise / squeeze scenario:
  • If CMP delivers a meaningful beat on EPS (e.g., loss much smaller than expected or even near breakeven) and raises guidance again, the combination of high short interest and call-heavy positioning could spark a double-digit squeeze up (low-teens percentage move).
  • This is a real tail — not our base case — but the ingredients are there.
• Bearish miss / guidance cut scenario:
  • A sizable miss on EBITDA or EPS and any hint of softer 2026 expectations could produce a >10% down move as the leverage story re-flares.
  • We see this as less likely than an in-line print, but it is the scenario where the straddle still ends up cheap in hindsight.

Net of these paths, we see only a modest statistical edge toward a negative gap:

Call: CMP gaps down, with an expected absolute gap size around 7%, versus a 12–13% move implied by the ATM straddle.
Direction confidence: about 0.54 that the opening gap is indeed to the downside rather than flat or up.

We’re leaning slightly against the bull-ish options skew, more in line with the cautious Street rating, leverage overhang, and history of CMP’s earnings-day behavior.

We also expect post-earnings volatility crush across the December 19 expiry even if the move is large enough for one side of the straddle to “work”; implieds look too high versus realistic paths.

5. Trade Framework (examples, not advice)

All examples here are for illustration only, using the uploaded chain. Actual pricing will move, and these are not recommendations.

A. Directional: bearish put spread into Dec 19

• Structure: Buy Dec 19 $20 put, sell Dec 19 $17.5 put.
• Rationale:
  • Defined-risk way to express a moderate down move that doesn’t require a crash.
  • From the snapshot mids, the spread costs roughly the difference between the $20 and $17.5 put premiums (about $0.70), with a max value of $2.50 if CMP is at or below $17.5 at expiration.
  • Break-even is around $19.30 (roughly a 5% drop from the reference price), nicely aligned with the base-case 5–9% down gap.

Risk: earnings upside squeeze, or even an in-line quarter that the market shrugs off, leaves the spread at a partial or full loss; you’re also exposed to time decay from earnings date to expiry.

B. Short-vol, mildly directional: iron condor around the post-earnings range

• Structure:
  • Sell Dec 19 $17.5 put and $22.5 call.
  • Buy further OTM wings (for example Dec 19 $15 put and $25 call) to cap risk.
• Rationale:
  • Expresses the view that CMP stays within roughly ±10–15% of the reference price by Dec 19 and that the realized move is smaller than the 12.6% implied.
  • The central short strikes are placed in the zone where we expect CMP to settle after a typical downside reaction (high teens) or even a modest upside surprise (low-20s).
  • You get short rich event vol with defined tails thanks to the long wings.

Risk: A large surprise (big miss or explosive squeeze) that pushes CMP through either wing can turn the condor into a near-max-loss trade. This approach is highly sensitive to both direction and realized volatility.

C. Cheap hedge for the squeeze scenario: OTM call butterfly

For traders who lean bearish/short-vol but respect the squeeze risk:

• Structure: Buy one Dec 19 $22.5 call, sell two Dec 19 $25 calls, buy one Dec 19 $27.5 call (a call butterfly).
• Rationale:
  • The uploaded chain shows active interest in upside strikes like $22.5 and $27.5, with relatively low premiums compared to the ATM.
  • A small debit on a tight call fly offers cheap convexity if CMP rips into the mid-20s on a very strong print and guidance raise.
  • This kind of hedge can sit alongside short-vol or slightly bearish core positioning.

Risk: If CMP sells off or only moves modestly, the butterfly expires worthless. It is not a replacement for proper risk management on core positions; it’s a ways-out tail hedge.

6. TL;DR

CMP goes into Q4 with improving operations, rising EBITDA guidance, and a credible path toward smaller losses and eventual positive EPS — but also with a crowded upside options tape, high implied volatility, and a still-heavy balance sheet. The options market is pricing roughly a 12–13% one-day move, far above CMP’s typical earnings reactions.

Our base case is an in-line fundamental quarter and steady guidance, which, against this setup, translates into a modest downside gap of about 7% and a post-earnings vol crush across the Dec 19 expiry. We put the odds of a downward earnings gap at ~54%, respecting a meaningful but secondary risk of a short-squeeze to the upside if CMP delivers a genuine beat and more aggressive guidance.