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Mosaic (MOS) Shares Up 29% YTD: What's Driving the Stock?

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Shares of The Mosaic Company (MOS - Free Report) have rallied 29.1% year to date compared with the industry’s rise of roughly 9.8%.



The company has a market cap of roughly $12.8 billion. Average volume of shares traded in the past three months was around 3,911.5K.  

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

Driving Factors

Upbeat earnings outlook, healthy prospects from the Vale Fertilizantes buyout along with strong demand and pricing fundamentals for crop nutrients have contributed to the rally in Mosaic’s shares.

In August, Mosaic raised adjusted earnings per share (EPS) guidance for 2018, considering strong business performance and lower expected effective tax rate for the year. It expects adjusted earnings in the range of $1.45-$1.80 per share, up from the prior projection of $1.20-$1.60. The company also expects adjusted EBITDA for 2018 in the band of $1.80-$1.95 billion, up from the prior view of $1.70-$1.90 billion.

The acquisition of Vale S.A.’s Vale Fertilizantes business makes Mosaic one of the leading fertilizer manufacturing and distribution companies in Brazil. The buyout has enabled the company capitalize on the rapidly growing Brazilian agricultural market. The acquisition is likely to be accretive to the company's EPS in 2018. It expects to realize synergies of around $100 from the buyout in 2018.

Mosaic is well positioned to leverage the rising global demand for fertilizers. The company is witnessing strong demand for nutrients in India, a major import market. It expects market conditions to improve and anticipates demand for potash and phosphate to continue rising in 2018. It also expects 2018 to be another record year for global shipments for the nutrients.

Moreover, the company is gaining from higher fertilizer prices, which also contributed to strong growth in the top line in the second quarter of 2018. Higher average realized sales prices also enabled the company achieve double-digit sales growth in the Phosphates and Potash segments. Mosaic expects to benefit from higher prices in the third quarter.

 

Zacks Rank & Stocks to Consider

Mosaic currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the basic materials space are Arconic Inc. (ARNC - Free Report) , Air Products and Chemicals, Inc. (APD - Free Report) and Celanese Corp. (CE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Arconic has expected long-term earnings growth rate of 20%. Its shares have rallied 22.8% in a year.

Air Products has expected long-term earnings growth rate of 13.3%. Its shares have gained 10.6% in the past year.

Celanese has expected long-term earnings growth rate of 10%. Its shares have gained 9% in the past six months.

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