Why You Should Retain Mosaic (MOS) Stock in Your Portfolio
The Mosaic Company MOS is benefiting from healthy demand for phosphate and potash and actions to improve its cost structure. However, softer fertilizer prices may weigh on its top line and margins.
The company’s shares are down 16.2% in a year compared with an 18% decline recorded by its industry.
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Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
Healthy Demand, Cost Cuts Aid MOS
Mosaic is well-placed to gain from strong demand for phosphate and potash. Higher agricultural commodity prices and attractive farm economics are driving demand for fertilizers globally. Farmer economics remains attractive in most global growing regions on strong crop demand, affordable inputs and favorable weather.
Demand for grains and oilseeds remains high along with strong farm economics. Strong agricultural commodity pricing trends and improved farmer affordability are likely to continue to drive demand for fertilizers. Strong demand is expected to support the company’s sales volumes.
Mosaic is also taking actions to reduce costs amid a still-challenging operating environment. Its actions to improve its operating cost structure through transformation plans are expected to boost profitability.
The company also remains committed to carrying out investments with high returns with moderate capital expenditures, such as the expansion of MicroEssentials capacity at its Riverview facility, constructing a new blending and distribution center in Palmeirante, Brazil and executing the construction of a purified phosphoric acid plant for sale in North America. The company expects total capital expenditures to be $1.3-$1.4 billion for 2023, including roughly $500 million in growth investments.
Weak Prices to Weigh on Margins
Softer potash and phosphate prices may impact the company’s margins. Prices of phosphate and potash have retreated since the back half of 2022 from their peak levels attained in the first half riding on the impacts of the Russia-Ukraine war and disruptions due to the sanctions in Belarus. Lower selling prices hurt sales and margins across the company’s Phosphate and Potash segments in the third quarter of 2023. Despite some recovery of late, weaker year-over-year fertilizer prices are expected to continue to weigh on the company’s profitability in the fourth quarter.
The Mosaic Company Price and Consensus
The Mosaic Company price-consensus-chart | The Mosaic Company Quote
Stocks to Consider
Better-ranked stocks worth a look in the basic materials space include Cameco Corporation CCJ, Axalta Coating Systems Ltd. AXTA and Hawkins, Inc. HWKN.
Cameco has a projected earnings growth rate of 156% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 20.8% over the past 60 days. The stock is up around 88% in a year. CCJ currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the consensus estimate for Axalta Coating Systems’ current-year earnings has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #2 (Buy), beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 33% in the past year.
Hawkins has a projected earnings growth rate of 21% for the current year. It currently carries a Zacks Rank #2. Hawkins has a trailing four-quarter earnings surprise of roughly 27.5%, on average. HWKN shares have rallied around 84% in a year.
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The Mosaic Company (MOS) : Free Stock Analysis Report
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Hawkins, Inc. (HWKN) : Free Stock Analysis Report
