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Mosaic (MOS) Stock Up 20% QTD: What's Behind the Rally?

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Shares of The Mosaic Company (MOS - Free Report) have shot up around 20% quarter to date. The company has also outperformed its industry’s growth of roughly 18% over the same time frame.  

Mosaic, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $11.3 billion. Average volume of shares traded in the last three months was around 4,211.9K. Mosaic has an expected long-term earnings per share growth rate of 7%.

Let’s take a look into the factors that are driving this fertilizer company.


Driving Factors

Strong earnings outlook, healthy demand trends for nutrients, higher fertilizer prices and buoyant prospects from the Vale Fertilizantes acquisition are contributing to the rally in Mosaic’s shares.

Mosaic is seeing higher fertilizer prices, which helped the company to log a profit of $42 million or 11 cents per share in the first quarter against a loss of $1 million or break-even per share recorded a year ago. The company was able to offset the impact of lower sales volume in the Phosphates and Potash segments through higher average realized sales prices during the quarter.

Mosaic, last month, bumped up its adjusted earnings per share guidance for 2018 factoring in improved market conditions. For the year, the company now sees adjusted earnings to be in the range of $1.20-$1.60 per share, up from its prior view of $1.00-$1.50.

Moreover, the company expects phosphates sales volumes in the band of 2.1 million to 2.4 million tons for the second quarter of 2018. The segment’s adjusted gross margin is expected to be in the band of $65 to $75 per ton. Potash sales volumes have been projected in the range of 2.1-2.4 million tons for the second quarter and the adjusted gross margin is anticipated to be in the band of $50 to $60 per ton.

Mosaic is strongly positioned to leverage the rising global demand for fertilizers. The company sees improving market conditions and expects higher demand for both phosphate and potash to continue this year. It envisions 2018 to be another record year for global shipments of both nutrients.

Moreover, the $2.5 million buyout of Vale Fertilizantes business makes Mosaic one of the leading fertilizer manufacturing and distribution companies in Brazil. The acquisition has allowed the company to capitalize on the rapidly growing Brazilian agricultural market. The acquisition is expected to be accretive to Mosaic's earnings per share in 2018 and the company is expected to realize around $100 million in synergies from the buyout this year.

The Mosaic Company Price and Consensus


The Mosaic Company Price and Consensus | The Mosaic Company Quote

Stocks to Consider

Stocks worth considering in the basic materials space include Westlake Chemical Corporation (WLK - Free Report) , The Chemours Company (CC - Free Report) and FMC Corporation (FMC - Free Report) , each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied roughly 79% over a year.

Chemours has an expected long-term earnings growth rate of 15.5%. The company’s shares have gained around 26% in a year.

FMC has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 15.8% in a year.

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