MOS Investment Analysis Report & Stock Research, The Mosaic Company

A Word Of Caution

According to our data source, The Mosaic Company (MOS) has experienced a significant drop in earnings and/or earnings estimates. In and of itself this drop in earnings could be an indication of greater troubles within the company or an extrenal event. Volatility of earnings expectations is important for an investor to be aware of at the very least.

Please take a moment to look at the RazorWire feed on the right hand side of the report to find more information regarding the company's dropoff in performance. Each time Mosaic Co. The is mentioned on business television or influential blogs recently should be displayed. This helps bring you up to date on any major issues they are facing right now. If you are not logged in, then we suggest you seek additional sources for the latest news on MOS.

Therefore, (and as always), check additional sources and available information regarding MOS before making an investment decision.

Ockham's Rating/Recommendation Summary

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MOS Revenue

As a value investing shop, we are interested in seeing how MOS's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 10 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 4.13x and the low end of the range at 1.12x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for MOS of 1.95x is well below its normal historic Price to Sales levels. At a price of $55.18, MOS is 26% below where we would expect to see it. Clearly, this stock looks undervalued compared to historical levels, at least on a Price to Sales basis. This will positively affect our analysis because it is rare to find a stock this far below historical norms, and we would expect some price appreciation to bring this metric back towards a more normal range.

MOS Cash Earnings

Cash Earnings is always one of the most important factors to review for a company and, more importantly, an investment in a stock. MOS is significantly above its historical average multiple of Cash Earnings. Looking at the last 10 years we can get a good understanding of what investors have grown to expect from MOS. For example, MOS's Cash Earnings ratio per share has fluctuated between 13.85 and 33.37 over this historical timeframe. This range is based upon a proprietary weighted methodology at Ockham, but can clearly show an investor where MOS is with respect to prior business periods.

Just recall that when a stock's price, as in the cases of MOS, is significantly elevated to the level of Cash Earnings being generated, the market has already priced in much of that value. For example, the historical average for MOS's Price to Cash Earnings ratio is 21% below the current ratio of 28.74. That is not an insignificant amount, and diminishes our overall outlook on MOS. However, you need to review several areas of a company's potential, and as management would point out, one metric is not the end-all-be-all of any analysis.

MOS Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In MOS’s case, the estimated annual dividend is $0.20 resulting in a current dividend yield of 0.36%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from MOS against the historic high and low levels over the past 10 years. The highest dividend yield from MOS over this period was 1.03% while the lowest dividend yield was 0.00% With that range in mind, MOS’s current dividend yield is a full 30.10% below its median dividend yield historically. This is a negative from our perspective.