7.5% gains in just 13 trading days – are you salivating? That’s what Mosaic Co (NYSE:MOS) investors have been treated to. A deal and some good numbers were enough to set the stock on fire. But what worries me is this: Is the momentum here to stay?

The first price bump came on Dec. 31 when China-based Sinofert Holdings inked a deal with Canpotex to buy 1 million tonnes of potash (NYSE:POT) through June 2013. Mosaic is the second-largest stakeholder in the cartel after Potash Corp./Saskatchewan (USA) (NYSE:POT), responsible for 37% of its potash requirements. Why is the deal important? Three things: It came after a long wait, 1 million is a big quantity, and potash companies can finally get their stockpiles moving.

Jan. 4 propelled Mosaic’s stock further when the company beat Street estimates by a gaping margin. Good news, both of them. But, Mosaic’s numbers had more than meets the eye, and the deal just isn’t enough to ensure Mosaic peaceful nights through 2013.

Scratch the surface

Mosaic’s earnings per share for the past quarter came at $1.47 compared to $1.40 last year. Waving off one-time gains, the adjusted EPS of $1.02 was still well above Street estimates of $0.88 per share. Seems like the company managed to topple already downbeat estimates. Equally tepid were top line estimates, but Mosaic couldn’t live up to them. Its sales fell to $2.5 billion from $3 billion a year ago. I am not too impressed.

Nor did I find much weighting in Mosaic’s next quarter guidance. It expects higher sales volumes for potash but prices lower by 12% to 18% compared to last year. Yet, that’s not too bad because even at the lowest range of both measures, potash revenue should be higher year-on-year. The real problem is phosphate. Phosphate sales volumes are expected to be pretty much in line with last year, but again projected price range of $485 - $515 per tonne is well below last year’s $536 per tonne. Knowing that Mosaic derives nearly 70% revenue from phosphate, these projections spell trouble.

Some analysts were quick to give Mosaic a green thumbs up (read: higher price target) as soon as it reported the quarter. But I do not belong to the breed of analysts who make one or two quarters the one-all-and-be-all of critical buy/sell decisions; and the source of my doubt isn’t any of the numbers mentioned above. It’s the way the company has performed over the past twelve months, and the level its shares are trading at currently.

It’s bleeding

data by YCharts

As if double-digit dip in revenue and net income over the past one year wasn’t enough, what really freaked me out was the plunging red line – Mosaic’s free cash flow is indeed having a free fall. So for net income amounting to $1.8 billion for the past twelve months, Mosaic’s free cash flow was less than $600 million. Lower profits and dwindling cash flows makes future growth possibility as uncertain.