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Mosaic (MOS) Down 9.8% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Mosaic (MOS - Free Report) . Shares have lost about 9.8% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Mosaic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Mosaic Misses Earnings and Revenue Estimates in Q3

Mosaic logged profits of $842 million or $2.42 per share in third-quarter 2022, up from $372 million or 97 cents per share in the year-ago quarter.

Barring one-time items, adjusted earnings per share were $3.22, missing the Zacks Consensus Estimate of $3.52.

Net sales rose roughly 56% year over year to $5,348.5 million in the quarter. It missed the Zacks Consensus Estimate of $6,010.1. Sales were driven by gains in all segments and higher prices.

Segment Highlights

Net sales in the Potash segment rose to around $1.4 billion in the reported quarter, up around 137% from the prior year’s quarter. The upside was driven by higher prices and volumes. Sales volumes in the segment were 2.1 million tons, up roughly 17% year over year. The segment’s gross margin per ton increased to $373 from $131 in the year-ago quarter.

The Phosphate division’s net sales rose around 23% year over year to $1.6 billion in the quarter, driven by higher prices. Sales volumes in the segment fell around 6% year over year in the quarter to 1.7 million tons. Gross margin per ton in the quarter was $217, up from $198 in the year-ago quarter.

Net sales in the Mosaic Fertilizantes segment were around $2.6 billion in the quarter, up around 44% year over year, driven by higher year-over-year prices. Sales volume in the quarter declined around 18% year over year to 2.8 million tons. The gross margin per ton in the quarter was $123, up from $99 a year ago.

Financials

At the end of the quarter, Mosaic had cash and cash equivalents of $702.8 million, down around 17% year over year. Long-term debt declined around 16% year over year to $3,329.3 million.

Net cash provided by operating activities was $888.8 million in the reported quarter, up around 110% year over year.

The company returned $1.8 billion to shareholders during the first nine months of 2022, including $1.6 billion in share repurchases.

Outlook

The company said that it expects tight grain and oilseed markets to persist through the balance of 2022 and into 2023. The war in Ukraine along with poor growing conditions in several major growing regions such as the Americas, Europe and China have led to reduced global agricultural production.

Mosaic also noted that sentiment has improved significantly from the spring season in North America, resulting in fall nutrient application rates trending toward normal levels. This is expected to deplete channel inventories. While nutrient prices remain historically elevated in Brazil, they have retreated to levels that are supporting in-country shipments, which are projected to pull year-end inventories down to levels comparable to last year. Government subsidies are also expected to remain at levels that support imports in India, per Mosaic.

The company forecasts total capital expenditures of $1.3 billion for full-year 2022. It projects selling, general and administrative expenses in the range of $460-$490 million.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -35.29% due to these changes.

VGM Scores

Currently, Mosaic has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Mosaic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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