As of July 18, 2023, The Mosaic Co (MOS, Financial) has seen a notable price change of 4.95%, with its stock currently trading at $37.53. With a market cap of $12.5 billion, this leading producer of primary crop nutrients phosphate and potash is attracting attention in the financial world. Formed in 2004 by the merger of IMC Global and Cargill's fertilizer business, The Mosaic Co operates phosphate rock mines in Florida, Louisiana, Brazil, and Peru, as well as potash mines in Saskatchewan, New Mexico, and Brazil. But is this company's stock overvalued, undervalued, or fairly valued? Let's turn to the GF Value for insights.
The GF Value of The Mosaic Co
The GF Value is a unique indicator that helps determine a stock's intrinsic worth. Calculated based on historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance, the GF Value of The Mosaic Co is currently $59.89. This suggests that at its current price, The Mosaic Co stock is significantly undervalued. As such, the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength and Profitability
Before investing, it's crucial to evaluate a company's financial strength. The Mosaic Co's cash-to-debt ratio is 0.1, which ranks lower than 83.83% of companies in the Agriculture industry. However, its overall financial strength is 7 out of 10, indicating fair financial stability.
Profitability is another key factor to consider. Over the past decade, The Mosaic Co has been profitable for 8 years. With a revenue of $18.8 billion and an EPS of $8.07 in the past twelve months, its operating margin is 21.66%, ranking better than 86.78% of companies in the Agriculture industry. This strong profitability is reflected in its ranking of 8 out of 10.
Growth and ROIC vs WACC
When valuing a company, growth is a critical factor. The Mosaic Co has an average annual revenue growth of 32.3%, which ranks better than 80.65% of companies in the Agriculture industry. However, its 3-year average EBITDA growth is 0%, ranking lower than other companies in the industry.
Comparing the company's return on invested capital (ROIC) to the weighted average cost of capital (WACC) is another effective way to assess profitability. The Mosaic Co's ROIC is 15.27, higher than its WACC of 9.3, suggesting that the company is creating value for shareholders.
Conclusion
In conclusion, The Mosaic Co (MOS, Financial) appears to be significantly undervalued. While it has fair financial strength and strong profitability, its growth ranks lower than most companies in the Agriculture industry. For a more thorough understanding of The Mosaic Co stock, you can check out its 30-Year Financials here.
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