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Terra Nitrogen Company, L.P. (TNH): Mosaic Co (MOS) Earnings: An Early Look

Earnings season is just about over, with almost all companies already having reported their quarterly results. But there are still a few companies left to report, and Mosaic Co (NYSE:MOS) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Fertilizers have been in high demand in recent years, and Mosaic Co (NYSE:MOS) has arisen from relative obscurity to become a much-followed stock in the industry. But lately, Mosaic has dealt with a big competitive disadvantage versus other fertilizer-makers. Let’s take an early look at what’s been happening with Mosaic Co (NYSE:MOS) over the past quarter and what we’re likely to see in its quarterly report on Thursday.

Stats on Mosaic

Analyst EPS Estimate $0.88
Change From Year-Ago EPS 38%
Revenue Estimate $2.29 billion
Change From Year-Ago Revenue 4.4%
Earnings Beats in Past 4 Quarters 2

Source: S&P Capital IQ.

Will Mosaic make its shares grow this quarter?
Analysts are getting increasingly optimistic about Mosaic’s future prospects, seeing solid growth for the rest of the 2013 fiscal year and accelerating improvement in earnings during fiscal 2014 and 2015. The stock has also shared in that enthusiasm, rising about 8% since late December.

Fertilizer companies have become extremely popular investments as crop prices have remained high. But the industry has become one of haves and have-nots, with Mosaic Co (NYSE:MOS) and fellow potash (NYSE:POT)- and phosphate-giant Potash Corp./Saskatchewan (USA) (NYSE:POT) having seen shares struggle over the past two years as high production costs and supply gluts have led to lower profits. By contrast, nitrogen-fertilizer players Terra Nitrogen Company, L.P. (NYSE:TNH) and CVR Partners LP (NYSE:UAN) have seen big gains, as the competitive advantage from low natural gas prices has helped boost their prospects.

But recently, the tide has appeared to start turning. Natural gas prices are finally on the rise, and that has pulled Terra Nitrogen Company, L.P. (NYSE:TNH) downward in the past month while sending Mosaic Co (NYSE:MOS) higher. Even with concerns about big price declines on recent potash deals with China and India, an evening of the playing field should help Mosaic and PotashCorp recover from their relative underperformance.

Mosaic is also seeking growth in new directions. Just last week, the company announced a huge joint venture with two Saudi Arabian companies in a deal to build a phosphate-fertilizer plant to open in late 2016. The venture could eventually produce 3.5 million tons of phosphate fertilizers annually.

In its quarterly report, watch for Mosaic to discuss how it can stand out from the other major players in the fertilizer market. If the company can manage to establish new profit centers like its Saudi joint venture, then Mosaic Co (NYSE:MOS) could move beyond simply rising and falling with the health of its commoditized fertilizer sales.

The article Mosaic Earnings: An Early Look originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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