Unveiling The Mosaic Co (MOS)'s Value: Is It Really Priced Right? A Comprehensive Guide
The Mosaic Co (NYSE:MOS) stock has seen a daily gain of 2.07 % and a 3-month gain of 9.24%. The company's Earnings Per Share (EPS) stands at 6.33. The question that arises is whether the stock is significantly undervalued. This article aims to provide an in-depth analysis of The Mosaic Co's valuation. We encourage readers to delve into the following sections for a comprehensive understanding of the company's financial standing.
Company Overview
Formed in 2004 by the merger of IMC Global and Cargill's fertilizer business, The Mosaic Co is a leading producer of primary crop nutrients phosphate and potash. The company's assets include phosphate rock mines in Florida, Louisiana, Brazil, and Peru, and potash mines in Saskatchewan, New Mexico, and Brazil. With a current stock price of $38.87 and a market cap of $12.90 billion, the company's valuation will be compared to the GF Value, an estimation of fair value, providing an insightful analysis of the company's intrinsic value.
Understanding GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides a fair value at which the stock should ideally be traded. If the stock price is significantly above the GF Value Line, it is overvalued, and its future return is likely to be poor. Conversely, if it is significantly below the GF Value Line, its future return will likely be higher.
According to GuruFocus Value calculation, The Mosaic Co stock appears to be significantly undervalued. Given that the stock is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength
Companies with poor financial strength pose a high risk of permanent capital loss to investors. To avoid this, it's crucial to assess a company's financial strength before purchasing shares. The Mosaic Co's cash-to-debt ratio of 0.16 ranks worse than 76.35% of 241 companies in the Agriculture industry. The overall financial strength of The Mosaic Co is 6 out of 10, indicating fair financial strength.
Profitability and Growth
Investing in profitable companies carries less risk, especially those that have consistently demonstrated profitability over the long term. The Mosaic Co has been profitable for 8 out of the past 10 years. In the past 12 months, the company had revenues of $16.80 billion and Earnings Per Share (EPS) of $6.33. Its operating margin of 16.46% is better than 78.48% of 237 companies in the Agriculture industry. GuruFocus ranks The Mosaic Co's profitability as strong.
Growth is a crucial factor in the valuation of a company. The 3-year average annual revenue growth of The Mosaic Co is 32.3%, which ranks better than 81.7% of 224 companies in the Agriculture industry. However, its 3-year average EBITDA growth rate is 0%, ranking worse than all 214 companies in the Agriculture industry.
ROIC vs WACC
Another way to assess a company's profitability is to compare its return on invested capital (ROIC) and the weighted cost of capital (WACC). The Mosaic Co's ROIC of 10.36 is higher than its WACC of 9.3, indicating a positive return on investment.
Conclusion
Overall, The Mosaic Co (NYSE:MOS) stock appears to be significantly undervalued. The company's financial condition is fair, and its profitability is strong. Its growth ranks worse than all 214 companies in the Agriculture industry. To learn more about The Mosaic Co stock, you can check out its 30-Year Financials here.
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This article first appeared on GuruFocus.
