Is The Mosaic Company (MOS) a Buy It Now?
Mosaic (MOS) recently made it to Zacks.com’s Most Wanted Stock list. Therefore, you may want to consider some of the key factors that may influence the stock’s performance in the near future.
Over the past month, shares of this fertilizer maker have returned -18.9%, compared to the -10.5% change in the Zacks S&P 500 composite. During this period, the industry Zacks Fertilizers , of which Mosaic is a part, lost 10.7%. The key question now is: what could be the future direction of the title?
Although media reports or rumors of a material change in a company’s business outlook usually cause its stock to trend and result in an immediate price change, there are always certain fundamental factors that ultimately determine the buy and hold decision.
Revisions to earnings estimates
Rather than focusing on anything else, at Zacks we prioritize assessing change in a company’s earnings projection. Indeed, we believe that the fair value of its shares is determined by the present value of its future earnings streams.
Mosaic is expected to post earnings of $3.95 per share for the current quarter, representing a year-over-year change of +237.6%. Over the past 30 days, the Zacks consensus estimate has changed by +10.6%.
The current year earnings consensus estimate of $13.50 indicates a year-over-year change of +167.9%. This estimate has changed by +10.1% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $11.31 indicates a change of -16.2% from what Mosaic is expected to report a year ago. Over the past month, the estimate has changed by +131.4%.
With an impressive externally audited track record, our proprietary stock rating tool – the Zacks Ranking – is a more conclusive indicator of a stock’s short-term price performance, as it effectively harnesses the power of earnings estimate revisions. . The magnitude of the recent change in the consensus estimate, along with three other factors related to earnings estimates, resulted in a Zacks ranking of No. 3 (hold) for Mosaic.
The chart below shows the evolution of the company’s consensus 12-month EPS estimate:
12 month EPS
Revenue Growth Forecasts
While a company’s earnings growth is arguably the best indicator of its financial health, nothing happens if it can’t grow its revenue. It is almost impossible for a company to increase its profits without increasing its revenue for long periods of time. Therefore, knowing the potential revenue growth of a business is crucial.
In the case of Mosaic, the consensus sales estimate of $5.61 billion for the current quarter indicates a year-over-year change of +100.2%. Estimates of $21.41 billion and $19.12 billion for the current and next fiscal year indicate changes of +73.2% and -10.7%, respectively.
Latest reported results and history of surprises
Mosaic reported revenue of $3.92 billion in the last reported quarter, representing a year-over-year change of +70.8%. EPS of $2.41 for the same period versus $0.57 a year ago.
Compared to the Zacks consensus estimate of $4.11 billion, reported revenue is a surprise of -4.48%. The EPS surprise was -1.23%.
In the past four quarters, the company has exceeded EPS estimates only once. The company exceeded consensus revenue estimates only once during this period.
No investment decision can be effective without considering the valuation of a stock. Whether a stock’s current price accurately reflects the intrinsic value of the underlying business and the company’s growth prospects is a key determinant of its future price performance.
While comparing the current values of a company’s valuation multiples, such as the price-to-earnings (P/E) ratio, the price-to-sales (P/S) ratio, and the price-to-cash flow (P/CF) ratio , along with its own historical values help determine whether its stock is fairly valued, overvalued or undervalued, comparing the company against its peers on these metrics gives a good idea of the reasonableness of the stock price .
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to traditional and unconventional valuation metrics to rank stocks from A to F (an A is better than a B; a B is better than a C; and so on), is quite useful in determining whether a stock is overvalued, correctly priced, or temporarily undervalued.
Mosaic is rated A on this front, indicating that it is trading at a discount to its peers. Click here to see values for some of the rating metrics that led to this rating.
The facts discussed here and plenty of other information about Zacks.com might help determine whether or not it’s worth paying attention to the market buzz about Mosaic. However, its No. 3 Zacks ranking suggests it could perform in line with the broader market in the near term.
7 best stocks for the next 30 days
Just Released: Experts distill 7 elite stocks from the current Zacks No. 1 Ranking 220 Strong Buys list. They consider these tickers “most likely for early price increases.”
Since 1988, the full list has beaten the market more than 2 times with an average gain of +25.4% per year. So be sure to give your immediate attention to these 7 handpicked ones.
Discover them now >>
Click to get this free report
The Mosaic Company (MOS): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks Investment Research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.