The Mosaic Firm is a producer and marketer of concentrated phosphate and potash for the worldwide agriculture trade. The corporate was fashioned via the mixture of fertilizer companies together with Cargill and IMC International. Its merchandise are processed into crop vitamins and shipped via rail, barge, and ocean-going vessels to clients in main agricultural facilities.
Whereas the corporate is among the many 4 largest potash producers on this planet, Mosaic faces headwinds from decrease fertilizer costs. Costs of crop vitamins stay below stress because the resumption of exports from prime suppliers has led to increased provides. Manufacturing cuts surrounding difficult potash market circumstances can also have an effect on potash volumes.
The corporate is uncovered to increased uncooked materials prices on account of tight provide. Costs of ammonia, a key enter for phosphate manufacturing, stay elevated partly because of the uncertainties over the availability from Russia amid the continuing battle. Plant closures and maintenances have additionally led to produce constraints.
The Zacks Rundown
Mosaic MOS, a Zacks Rank #5 (Robust Promote) inventory, is a part of the Zacks Fertilizers trade group, which presently ranks within the backside 10% out of roughly 250 Zacks Ranked Industries. As such, we anticipate this trade group as a complete to underperform the market over the subsequent 3 to six months, simply because it has over the previous yr:
Picture Supply: Zacks Funding Analysis
Candidates within the backside tiers of industries can typically be intriguing brief candidates. Whereas particular person shares have the flexibility to outperform even when included in a lackluster trade, the inclusion in a weaker group serves as a headwind for any potential rallies and the journey ahead is that rather more tough.
Together with many different fertilizer shares, MOS shares have been struggling this yr whereas the final market returned to new heights. The inventory is hitting a collection of decrease lows and represents a compelling brief alternative as we head deeper into the latter half of the yr.
Latest Earnings Misses & Deteriorating Outlook
The agricultural firm has fallen in need of earnings estimates in three of the previous 4 quarters. Earlier in August, Mosaic reported second-quarter earnings of $0.54/share, lacking the $0.68/share Zacks Consensus estimate by -20.6%. The corporate has posted a trailing four-quarter common earnings miss of -10.17%.
Persistently falling in need of earnings estimates is a recipe for underperformance, and MOS isn’t any exception.
Mosaic has been on the receiving finish of unfavorable earnings estimate revisions as of late. Trying on the present quarter, analysts have slashed estimates by -8.96% prior to now 60 days. The Q3 Zacks Consensus Estimate is now $0.61/share, reflecting unfavorable development of -10.3% relative to the prior yr.
Picture Supply: Zacks Funding Analysis
Falling earnings estimates are an enormous purple flag and must be revered. Unfavorable development year-over-year is the kind of development that bears prefer to see.
Technical Outlook
As illustrated under, MOS inventory is in a sustained downtrend. Discover how the inventory has continued to fulfill resistance at necessary technical ranges such because the 200-day shifting common (purple line). Additionally word how the 200-day common is sloping down – one other good signal for the bears.
Picture Supply: StockCharts
MOS inventory has skilled what is called a “dying cross,” whereby the inventory’s 50-day shifting common (blue line) crosses under its 200-day shifting common. The inventory must make an outsized transfer to the upside and present growing earnings estimate revisions to warrant taking any lengthy positions. Shares have fallen almost 20% this yr alone.
Last Ideas
A deteriorating basic and technical backdrop present that this inventory is just not set to make its solution to new highs anytime quickly. The truth that MOS is included in one of many worst-performing trade teams offers one more headwind to an extended listing of considerations. A historical past of earnings misses and falling future earnings estimates will possible function a ceiling to any potential rallies, nurturing the inventory’s downtrend.
Potential traders might need to give this inventory the chilly shoulder, or maybe embody it as a part of a brief or hedge technique. Bulls will need to avoid MOS till the scenario exhibits main indicators of enchancment.
5 Shares Set to Double
Every was handpicked by a Zacks skilled because the #1 favourite inventory to achieve +100% or extra in 2024. Whereas not all picks may be winners, earlier suggestions have soared +143.0%, +175.9%, +498.3% and +673.0%.
A lot of the shares on this report are flying below Wall Avenue radar, which offers a terrific alternative to get in on the bottom ground.
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The Mosaic Firm (MOS) : Free Inventory Evaluation Report
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially mirror these of Nasdaq, Inc.
