Why Aren’t Mosaic Co (MOS) Earnings Growing?

Page 1 of 2

Mosaic Co (NYSE:MOS) will release its quarterly report next Tuesday, but investors have already been nervous about demand for the company’s fertilizer products. With the stock having lost substantial ground in the past couple of months, shareholders want to know whether Mosaic earnings will recover and move higher in the near future.

Mosaic Co (NYSE:MOS)

Given that crop prices have remained reasonably high, you’d expect that farmers would still have high demand for Mosaic Co (NYSE:MOS)’s potash and phosphate-based fertilizers. But weakness in emerging markets could limit that demand until economic conditions in places like India start to improve. Let’s take an early look at what’s been happening with Mosaic over the past quarter and what we’re likely to see in its quarterly report.

Stats on Mosaic

Analyst EPS Estimate $1.15
Change From Year-Ago EPS (3.4%)
Revenue Estimate $2.70 billion
Change From Year-Ago Revenue (4.4%)
Earnings Beats in Past Four Quarters 2

Source: Yahoo! Finance.

Can Mosaic earnings turn around and move higher?
Analysts have stayed relatively firm in their estimates on Mosaic Co (NYSE:MOS) earnings over the past few months, keeping their May-quarter calls unchanged and adding a penny per share to their current full-year estimates. The stock, though, hasn’t held up well, falling almost 5% since early April.

Coming off the company’s previous quarter, Mosaic had already disappointed investors with slow growth. Although the fertilizer company managed to increase its earnings by 26% from the year-ago quarter, Mosaic Co (NYSE:MOS)’s results came in below expectations by about 8% on earnings and 2% on revenue.

Yet the global demographic trends that have existed for years continue to support the fundamentals of the fertilizer industry. In order to feed a growing world population, countries around the world need fertilizers to boost yields.

Some question, though, whether Mosaic Co (NYSE:MOS) is attacking the most profitable opportunities. Rival Potash Corp./Saskatchewan (USA) (NYSE:POT) gets a much larger percentage of its phosphate revenue from the feed and industrial market, which fetches higher margins than selling phosphates as fertilizer. Moreover, PotashCorp has impressively low costs for its namesake potash, whereas Mosaic said in mid-May that it would delay the final phase of its potash expansion strategy until conditions become more profitable in the industry.

Still, one headwind is finally disappearing for Mosaic Co (NYSE:MOS), as natural-gas prices have been on the rise. For years, Terra Nitrogen Company, L.P. (NYSE:TNH) and other nitrogen-based fertilizer companies saw their shares soar as natural gas plunged to decade-low levels on the heels of increased shale-gas production. Now, even though gas prices remain fairly low by historical standards, some of the immense price advantage of nitrogen fertilizers has disappeared, keeping Terra and its peers in a holding pattern and making Mosaic and other mined-fertilizer companies look more attractive by comparison. Moreover, even if gas starts to fall again, Mosaic has plans to boost its nitrogen capacity to become more diversified in its product offerings.

Page 1 of 2

Biotech Insider Alert - $6 Stock To Hit $40

$200 Million Dollar Healthcare Hedge Fund's #1 Best Idea Right Now

The best healthcare hedge fund out there right now is one of the largest shareholders in this biotech stock. The fund returned more than 20% in each of the last 2 years with a virtually fully hedged portfolio, and it's sending out a BUY signal on this biotech stock. Get your FREE REPORT today (retail value of $300)

This is a FREE report from Insider Monkey. Credit Card is NOT required.
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Famous Gay Athletes

The World’s Most Famous Circuses

Best Hair Stylists

Most Popular NASCAR Drivers

The Best Romance Movies of all Time

The Most Wanted Drug Lords

The Oldest Money Managers

The Greatest Directors in the World

Largest Animals in the World

World’s Most Expensive Desserts

Best Selling Comic Books of All Time

A-list Actors who Sabotaged Their Career

Rappers With a College Degree

The Best Jazz Albums of all Time

The Most Influential Jazz Musicians

The World’s Most Famous Photographers

The Best Oscar-Winning Songs

Most Influential Choreographers Ever

Most Expensive Department Stores in the World

The Most Expensive Stolen Paintings in the World

The World’s Most Expensive Teas

Top Oscar Record Holders

The Most Expensive Flowers in the World

Countries With a Booming Film Industry

Most Expensive Cupcakes in the World

Uncommon European Escapes

The Most Stolen Artists in History

Best Travel Destinations in Australia

World’s Most Expensive Musical Instruments

World’s Most Famous Animals

Most Expensive Cakes in the World

Most Expensive Kosher Champagne in the World

Most Expensive Kosher Wine in the World

The Most Surprisingly Dark Fairy Tales

Most Popular Travel Destinations in Asia

The 10 Most Expensive Dresses Ever Worn to the Oscars

World’s Most Visited Art Museums

Best Countries for Photographers to Work in

Best Paid Jobs in the Film Industry

The Most Renowned Recovered Paintings Ever

Child Stars That Turned out Just Fine

Books That Were Banned in the Past Century

World’s Richest Dancers

Best Remedies against Bad Breath

Foods That Improve Your Skin Texture

Best-Selling Children’s Books of all Time

Foods That Boost Your Libido

Best-Selling Books of all Time

The Most Expensive Academy Awards Jewelry in History

Most Expensive Japanese Restaurant In New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 129% in 2.5 years!! Wondering How?

Download a complete edition of our newsletter for free!