Mosaic Stock: Rising Turbo-Charge Prices Top U.S. Fertilizer Producer Earnings

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This article was written exclusively for Investing.com

  • Ukraine War, Sanctions Create Global Fertilizer Shortage
  • The best fertilizer companies in the world
  • Mosaic: Leading Fertilizer Producer
  • An uptrend in earnings
  • If you want to improve your search for new investment ideas, check out InvestingPro+

Each year, as the world’s population grows by around 80 million people, the world becomes increasingly dependent on the growing size of crops. Fertilizers are an essential agricultural input for this. They have a direct impact on the ability to grow more while increasing planting efficiency.

Many farmers use fertilizers daily to increase crop yields because they improve the water-holding capacity of the soil and increase its fertility.

Fertilizers can be of natural origin or come from synthetic production. In both forms, they provide plant and soil nutrients that require nitrogen, potassium, and phosphorus.

The Mosaic Company (NYSE:) is a leading fertilizer producer, distributing products to North American and global customers.

Top Fertilizer Exporting Countries in the World

In 2021, the main fertilizer exporters in the world were:

Source: Worldstopexports.com

As the chart shows, Russia and China controlled 28.4% of fertilizer exports in 2021.

Ukraine War and Sanctions Create Global Shortage

The war in Ukraine and Russian export bans to “hostile” countries supporting Ukraine have driven up prices, including those of fertilizers; the conflict also created availability issues. China’s “unlimited” cooperation with Russia and tensions with the United States and Europe are further limiting fertilizer supplies and putting additional upward pressure on prices in 2022 and beyond.

The best fertilizer companies in the world

As of June 13, the top global fertilizer companies by market capitalization were:

Source: Companiesmarketcap.com

Mosaic, the world’s number three as well as the top US producer, held an 11.4% share of the publicly traded fertilizer market by market capitalization.

Mosaic: leading fertilizer producer

Mosaic is headquartered in Tampa, Florida, but is a multinational company. A summary of MOS activities includes:

Source: bar chart

At around $51 per share on June 13, MOS had a market capitalization of over $19.3 billion. On average, 8.02 million shares change hands every day. MOS pays shareholders a dividend of $0.60, which translates to a 1.18% return on the stock.

In March 2020, as the global pandemic gripped markets across all asset classes, MOS shares fell to a low of $6.50.

Mosaic Weekly Chart

Source: bar chart

The chart highlights that the trend was already up before 2022, with the stock closing at $39.29 on December 31, 2021. By the end of last year, MOS shares were up more than six times from the March 2020 trough.

When Russia invaded Ukraine in February, MOS products gained new strategic importance worldwide. In April, the stock traded at a high of $79.28, 12.2 times the price at the March 2020 low and more than double the level at the end of 2021. MOS returned to the 51 level $ on June 13, but its position in the fertilizer market remains critical given the lack of fertilizer from Russia.

Earnings Uptrend

MOS have steadily increased over the past four quarters.

Mosaic Earnings Trend

Source: Yahoo Finance

MOS EPS increased steadily. After earning $2.41 per share in the first quarter of 2022, current expectations are for EPS of $4.12 in the second quarter, a period of strong fertilizer demand where MOS product prices have soared.

Mosaic quarterly earnings and revenue
Mosaic quarterly earnings and revenue

Source: Yahoo Finance

The company’s quarterly revenue and earnings charts show explosive growth.

A survey of 19 analysts on Investing.com has an average price target of $74.73 for MOS shares, with a range of $59 to $95.

Consensus of MOS analysts

Source: Investing.com

At the $51 level, the target is more than 45% above the current price. Additionally, the $51 MOS is below analysts’ forecast lows, making the stock inexpensive in the current environment.

As the stock market fell in 2022, MOS bucked the trend. The war in Ukraine, sanctions against Russia and Russian retaliation are bullish for the fertilizer company.

Feeding the world depends on access to fertilizers, and MOS is perfectly positioned to fill some of the void left by Russian export bans. Rising global fertilizer prices will likely continue to boost the US producer’s profits.

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