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Why listen to Mosaic earnings after listening to Potash Corp.?

Xun Yao Chen

Why Mosaic sees a much more upbeat outlook than Potash Corp. (Part 1 of 5)

Lower prices

Before the market opened on February 11, 2014, Mosaic Co. (MOS) released its earnings and held its earnings call for its fourth quarter 2013 results. Adjusted earnings for the quarter came in at $0.36, which was 71.65% lower than what the company had announced for fourth quarter 2012 results and below the $0.51 announced for the last quarter.

Shares rise despite poor results

While earnings came in even below analysts’ consensus of $0.431, shares started trading 2.0% higher from the previous day’s close on an improved outlook and buyback, according to an article on Reuters. Shares of Potash Corp. (POT), Intrepid Potash Inc. (IPI), and Sociedad Quimica y Minera de Chile (SQM) ended the day relatively unchanged from the day before, suggesting Mosaic Co.’s jump may have been driven more by company-specific fundamentals, as opposed to an industry-specific driver.

Early stage of industry recovery

Like Potash Corp., Mosaic Co. sees an early stage of an industry recovery, as sales volume picked up and potash and phosphate prices bottomed. However, unlike Potash Corp. (POT), Mosaic Co. gave a more optimistic view than Potash Corp.

Although companies often address similar topics, they don’t always have the time to address analysts’ questions. Plus, it’s important for investors to follow multiple industry peers’ presentations and earnings calls to get a more well-rounded picture of the industry’s future outlook.

As of February 14, 2014, Mosaic Co. was trading at $47.78 a share, with a forward PE multiple of 17.22 times.

Continue to Part 2

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