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Mosaic Stock: Rising Prices Turbo-Charge Top U.S. Fertilizer Producer’s Earnings

By Andy HechtStock MarketsJun 14, 2022 05:39AM ET
www.investing.com/analysis/mosaic-stock-rising-prices-turbocharge-top-us-fertilizer-producers-earnings-200625700
Mosaic Stock: Rising Prices Turbo-Charge Top U.S. Fertilizer Producer’s Earnings
By Andy Hecht   |  Jun 14, 2022 05:39AM ET
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This post was written exclusively for Investing.com

  • War in Ukraine, sanctions creating worldwide fertilizer shortage
  • World's top fertilizer companies
  • Mosaic: Leading fertilizer producer
  • A bullish earnings trend
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Each year, as the global population grows by around 80 million people, the world increasingly depends on escalating crop sizes. Fertilizers are a critical farming input for that. They have a direct impact on the ability to grow more while augmenting planting efficiencies.

Many farmers use fertilizers on a daily basis to boost crop yields since they enhance the soil’s water retention capacity and increase its fertility.

Fertilizers can be sourced naturally or come from synthetic production. In either form they supply nutrients to plants and soil requiring nitrogen, potassium and phosphorous.

The Mosaic Company (NYSE:MOS) is a leading fertilizer producer, distributing product to North American and global customers.

World’s Leading Fertilizer Exporting Countries

In 2021 the world’s top fertilizer exporters were:

Source: Worldstopexports.com

As the chart shows, Russia and China controlled 28.4% of the fertilizer exports in 2021.

War In Ukraine And Sanctions Create Worldwide Shortage

The war in Ukraine and Russian export bans to “unfriendly” countries supporting Ukraine have caused prices, including for fertilizers, to soar; the conflict has also created availability issues. China’s “no-limits” cooperation with Russia and tensions with the U.S. and Europe further limit fertilizer supplies and put additional upward pressure on prices in 2022 and beyond.

World’s Top Fertilizer Producing Companies

As of June 13, the leading global fertilizer companies by market cap were:

Source: Companiesmarketcap.com

Mosaic, number-three globally as well as the top U.S. producer, had an 11.4% share of the publicly traded fertilizer market by market cap.

Mosaic: Leading Fertilizer Producer

Mosaic is headquartered in Tampa, Florida, but is a multi-national business. A summary of MOS’s businesses includes:

Source: Barchart

At around $51 per share on June 13, MOS had a market cap of more than $19.3 billion. An average of 8.02 million shares change hands each day. MOS pays shareholders a $0.60 dividend, which translates to a 1.18% yield on the stock.

In March 2020, as the global pandemic gripped markets across all asset classes, MOS shares fell to a $6.50 low.

Mosaic Weekly Chart
Mosaic Weekly Chart

Source: Barchart

The chart highlights that the trend was already higher before 2022, with the stock closing at $39.29 on Dec. 31, 2021. At the end of last year MOS shares had moved over six times higher from the March 2020 low.

When Russia invaded Ukraine in February, MOS products took on new strategic importance worldwide. In April, the stock traded to a high of $79.28, 12.2 times the price at the March 2020 lows, and more than double the level at the end of 2021. MOS has pulled back to the $51 level on June 13, but its position in the fertilizer market remains critical given the lack of fertilizers flowing from Russia.

Bullish Earnings Trend

MOS earnings have been steadily rising over the past four quarters.

Mosaic Earnings Trend
Mosaic Earnings Trend

Source: Yahoo Finance

MOS EPS has risen steadily. After earning $2.41 per share in Q1 2022, the current expectations are for EPS of $4.12 in Q2, a high-demand fertilizer period where prices for MOS products have soared.

Mosaic Quarterly Earnings And Revenues
Mosaic Quarterly Earnings And Revenues

Source: Yahoo Finance

The company’s quarterly revenue and earnings charts show explosive growth.

A survey of 19 analysts on Investing.com has an average price target of $74.73 for MOS shares, with a range of $59 to $95.

MOS Analyst Consensus
MOS Analyst Consensus

Source: Investing.com

At the $51 level, the target is more than 45% above the current price. Moreover, MOS at $51 is below the low end of analysts’ forecasts, making the stock inexpensive in the current environment.

While the stock market has moved lower in 2022, MOS has bucked the trend. The war in Ukraine, sanctions on Russia and Russian retaliation are bullish for the fertilizer company.

Feeding the world depends on access to fertilizers, and MOS is perfectly positioned to fill some of the void left by Russian export bans. Rising global fertilizer prices will likely continue to turbo-charge earnings for the U.S. producer.

***

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Mosaic Stock: Rising Prices Turbo-Charge Top U.S. Fertilizer Producer’s Earnings
 

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Mosaic Stock: Rising Prices Turbo-Charge Top U.S. Fertilizer Producer’s Earnings

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Comments (4)
Dean SP
Dean SP Jun 21, 2022 10:25AM ET
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Really appreciate the article and analysis.
Jeff Page
Jeff Page Jun 15, 2022 6:56AM ET
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CF = Nitrogen, N-P-K . They also have pipeline.
Lars Jenssen
Lars Jenssen Jun 14, 2022 11:20AM ET
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Yara is a larger Company than half that list
Elmahdi Oummih
Elmahdi Oummih Jun 14, 2022 7:35AM ET
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MOS bribed US Lawmakers to pass tough tariffs on foreign imports that have really hurt US farmers and the only real beneficiary of this action has been MOS. Despite bribing Congressmen to sell farmers down the river, MOS had serious flooding issues and is run by incompetent management, and that is putting it gently. This Florida based company should be trading at 200 dollars a share because of the monopoly their bribes created them, but criminals tend to not be the sharpest tools in the shed. The price short term is likely to go up as soon as there is even a hint of a rebound in markets, but long term, these guys are headed to bankruptcy as soon as the tariffs are removed, which they will be as soon as De Santis takes some heat for his personal dealings with these guys.
Tomas Toleikis
Tomas Toleikis Jun 14, 2022 7:35AM ET
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yeah, and where were farmers when these same fertilizer companies were loosing money for years? monopolies you say.. or boomerang has hit back, for allowing cheap imports that were below US companies' production costs to hit US market for many years and the right actions were finally taken. Btw, tariffs were introduced for fertilizers other than what MOS is producing.
 
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