Investors interested in Fertilizers stocks are likely familiar with Mosaic (MOS) and CF Industries (CF). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Mosaic and CF Industries are holding a Zacks Rank of # 1 (Strong Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MOS currently has a forward P/E ratio of 18.53, while CF has a forward P/E of 32.05. We also note that MOS has a PEG ratio of 2.65. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CF currently has a PEG ratio of 5.34.
Another notable valuation metric for MOS is its P/B ratio of 1.19. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CF has a P/B of 1.85.
Based on these metrics and many more, MOS holds a Value grade of B, while CF has a Value grade of C.
Both MOS and CF are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MOS is the superior value option right now.
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The Mosaic Company (MOS) : Free Stock Analysis Report
CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
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