The Mosaic Co (MOS, Financial) has experienced a daily gain of 2.59%, yet over the past three months, the stock has seen a decline of 20.18%. With an Earnings Per Share (EPS) of 3.9, investors may wonder if the stock is significantly undervalued. This article delves into the valuation analysis of The Mosaic Co (MOS), offering insights into whether its current market price reflects its true worth. Read on to discover the intrinsic value of The Mosaic Co (MOS) through our detailed analysis.
Company Introduction
Formed in 2004 from the merger of IMC Global and Cargill's fertilizer business, The Mosaic Co is a prominent producer of essential crop nutrients, phosphate, and potash. With a diverse portfolio of mines across Florida, Louisiana, Brazil, Peru, Saskatchewan, New Mexico, and Brazil, the company stands as a significant player in the agricultural sector. The current stock price of $33.62, when compared to the GF Value of $52.48, suggests that The Mosaic Co may be significantly undervalued. This valuation gap warrants a closer examination of the company's financials and market position.
Summarize GF Value
The GF Value is a unique measure that estimates the intrinsic value of a stock, taking into account historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance projections. The GF Value Line is a visual representation that suggests a fair trading value for a stock. When a stock's price significantly deviates from this line, it may indicate that it is either overvalued or undervalued, which could influence its future returns.
At a market cap of $11 billion, The Mosaic Co (MOS, Financial) appears to be significantly undervalued according to the GF Value. This discrepancy suggests that the long-term return of its stock could potentially surpass the company's own business growth.
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Financial Strength
Investing in companies with robust financial strength is crucial to mitigate the risk of capital loss. The Mosaic Co's financial strength is assessed by examining ratios such as cash-to-debt, which currently stands at 0.15. This figure is lower than 75.3% of companies in the Agriculture industry. Despite this, The Mosaic Co's overall financial strength is rated as fair, with a score of 7 out of 10 from GuruFocus.
Profitability and Growth
Consistent profitability is a hallmark of a less risky investment, especially when coupled with high profit margins. The Mosaic Co has maintained profitability for 8 out of the last 10 years. With a revenue of $15 billion and an operating margin of 11.71%, The Mosaic Co's profitability is ranked 8 out of 10, signaling strong financial health.
Growth is a pivotal factor in a company's valuation, often correlating with long-term stock performance. The Mosaic Co boasts a 3-year average annual revenue growth rate of 32.3%, positioning it favorably within the Agriculture industry. However, its 3-year average EBITDA growth rate is 0%, which is less impressive when compared to industry peers.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can further illuminate its profitability. The Mosaic Co's ROIC of 6.62 is currently below its WACC of 9.57, suggesting that the company may not be creating value for shareholders at an optimal rate.
Conclusion
In summary, The Mosaic Co (MOS, Financial) presents signs of being significantly undervalued. The company's fair financial condition and strong profitability are noteworthy, although its growth could be more robust. For a detailed look into The Mosaic Co's financials, interested investors can review its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
