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Mosaic (MOS) Shares Up 18% in 3 months: What's Driving it?

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Shares of The Mosaic Company (MOS - Free Report) have rallied 18.3% in the past three months compared with the industry’s rise of roughly 2.6%.

The company has a market cap of roughly $13.5 billion. Average volume of shares traded in the past three months was around 4,218.5K.  

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 and favorable fundamentals for crop nutrients are contributing to the rally in Mosaic’s shares.

The company’s profits rose year over year in third-quarter 2018. Adjusted earnings per share (EPS) of 75 cents beat the Zacks Consensus Estimate of 64 cents.

Factoring in strong business performance and lower expected effective tax rate for the year, the company raised its adjusted EPS guidance for 2018. Mosaic now expects adjusted EPS in the range of $1.80-$2.00, up from the prior view of $1.45-$1.80. The company also expects adjusted EBITDA for 2018 in the band of $1.90-$2 billion, up from the previous view of $1.80-$1.95 billion.

The Vale Fertilizantes acquisition makes Mosaic one of the leading fertilizer manufacturing and distribution companies in Brazil. The buyout has enabled the company to capitalize on the rapidly growing Brazilian agricultural market.

The buyout is projected to generate $275 million of annualized improved cash flow by the end of 2020 (with $140-$160 million in synergies expected in 2018) along with providing considerable leverage to improvements in the crop nutrient business cycle to the company.

Mosaic is well positioned to leverage the favorable global demand environment for fertilizers. Mosaic expects phosphates sales volumes in the band of 1.7-2 million tons for the fourth quarter of 2018, reflecting underlying firmness in demand and supply dynamics as well as normal year-end seasonality. It sees rising global demand for phosphates and expects record shipments in 2019.

The company also expects market conditions to stay strong in potash along with high operating rates in the three Canadian mines. It sees potash volumes in the range of 2.2-2.5 million tons for the fourth quarter.

The company is also gaining from higher fertilizer prices, which boosted growth in its top line in the third quarter of 2018. Higher average realized sales prices also enabled the company achieve double-digit sales growth in Phosphates and Potash segments.  

The Mosaic Company Price and Consensus


The Mosaic Company Price and Consensus | The Mosaic Company Quote


Zacks Rank & Other Stocks to Consider

Mosaic currently sports a Zacks Rank #1 (Strong Buy).

A few other top-ranked stocks in the basic materials space are CF Industries Holdings, Inc (CF - Free Report) , Methanex Corporation (MEOH - Free Report) and Ashland Global Holdings Inc. (ASH - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

CF Industries has an expected long-term earnings growth rate of 6%. The company’s shares have surged 24.9% in the past year.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have gained 11.6% in a year’s time.

Ashland has an expected long-term earnings growth rate of 10%. The company’s shares have gained 14.3% in the past year.

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