alingtonsky
Forumer storico
con un buon timing Merrill Lynch nel dicembre 2008 diceva che certe azioni del settore fertilizzanti avevano toccato il fondo ed erano da acquistare.
Venerdì un articolo, da altra fonte, affermava che MOS può ancora essere considerata sottovalutata e può essere valutata per essere inserita nel proprio portafoglio azionario strategico.
Oct 29, 2010 10:20 AM
In its latest quarterly report Mosaic (NYSE:MOS) reported diluted earnings per share of $0.67, nearly a 200% year-over-year increase. And although its stock currently trades at around $70, $20 higher than in the October of 2009, the shares may still be undervalued.
Balance Sheet Strength
With $2.36 billion cash on its balance sheet and only $1.32 billion in long-term and short-term debt, Mosaic has a negative $1 billion net debt position. Cash flow from operations has increased from $172.4 million to $556.2 million in the last year as the firm increased its capital expenditure outlays to nearly $300 million. Overall, Mosaic has a solid balance sheet and has shown tremendous growth over the past year.
Growing Business Segments
Mosaic is organized into two business segments: phosphates and potash. The phosphates segment operates processing plants along with mines and production facilities in Louisiana and Florida. The potash business, on the other hand, is largely concentrated in Canada.
Quarterly net sales came in at $2.19 billion. After accounting for intersegment sales, 28% of revenue was attributed to the potash business and the remainder to the phosphates segment. However, the margins for potash are superior to those of phosphate operations. While the respective revenues for the potash and phosphate business segments were $601.4 million and $1,581.1 million, the corresponding operating earnings figures were $218 million and $178 million. The 2009 results reveal a similar pattern with operating margins of 40% and 7% for the potash and phosphate segment respectively.
Future Upside
Management notes that Mosaic will continue to expand the capacity of its potash segment. With a current imbalance between supply and demand, potash prices are expected to increase. Brazil, which has shows strong demand for potash, recently purchased product from Belarusian Potash Corp. for December delivery at above current market prices.
North American and international demand has shown a large increase for phosphates and potash. Potash sales in North American increased by 170%, and phosphate sales surged by 54%. The jump in potash sales was heavily driven by a rebound in volume while the increase in phosphate sales arose from price increases.
Risks
A potential factor that is holding down Mosaic stock price is litigation risk, as disputes regarding contractual agreements can potentially result in material financial penalties. A number of smaller fertilizer companies have filed lawsuits which are collectively being referred to as the Potash Antitrust Case. Mosaic's 10-Q reports "We believe that the allegations in the Potash Antitrust Cases are without merit and intend to defend vigorously against them. ... "
The Bottom Line
With fundamentals pointing to a strong agricultural performance, Mosaic should be closely considered as a strategic addition to one's portfolio. Other firms in its industry include Monsanto (NYSE:MON), Syngenta (NYSE:SYT), Compass Mineral (NYSE:CMP) and Yongye International (Nasdaq: YONG).
A Close Look At Mosaic
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