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Mosaic (MOS) Up 26.6% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Mosaic (MOS - Free Report) . Shares have added about 26.6% in that time frame, outperforming the S&P 500.

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

Mosaic's Earnings Beat, Sales Miss Estimates in Q3

Mosaic logged net loss of $6.2 million or 2 cents per share in third-quarter 2020 compared with a net loss of $44.1 million or 11 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 23 cents that beat the Zacks Consensus Estimate of 22 cents.

Net sales fell 13.5% year over year to $2,381.5 million in the quarter. The figure missed the Zacks Consensus Estimate of $2,408.7 million.

Segment Highlights

Net sales in the Phosphates segment were $745 million in the quarter, down 9.1% year over year. Sales volumes in the segment went down 6% year over year due to inventory limitations stemming from a strong spring season. The segment’s gross margin improved to $11 from a loss of $10 in the year-ago quarter as lower raw material costs, strong volumes and production cost improvement overcame price declines.

Potash division’s net sales dropped 24.7% year over year to $464 million due to lower prices. Sales volumes in the segment fell 2% year over year. Gross margin in the quarter was $108 million, down 31.6% year over year.

Net sales in the Mosaic Fertilizantes segment were $1,140 million, down 17.9% year over year. Results were affected from lower prices that more than offset stronger sales volumes. Gross margin increased to $177 million from $132 million in the year-ago quarter.

Financials

At the end of first nine months, Mosaic had cash and cash equivalents of $923 million, up 44% year over year. Long-term debt fell 0.3% year over year to $4,519.5 million.

Net cash provided by operating activities fell 29.9% year over year to $340.6 million in the reported quarter. The company’s capital expenditures were $265 million in the quarter.

Outlook

For 2020, Mosaic now expects depreciation, depletion and amortization of $860-$900 million compared with $860-$910 million expected earlier. The company continues to anticipate net interest expenses of $180-$190 million for 2020. Capital expenditure is expected to be around $1.2 billion for 2020.

The company also stated that strengthening fundamental trends is expected to continue in 2021. Factors like strong crop demand, affordable inputs and favorable weather makes grower economics across the globe attractive.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 34.54% due to these changes.

VGM Scores

At this time, Mosaic has a strong Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 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 trending upward for the stock, and the magnitude of these revisions looks promising. 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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