Tags: Mosaic | gunning | rise | MOS

Mosaic Guns for Rise on Weather, Emerging Markets

By Greg Brown   |   Thursday, 10 May 2012 11:43 AM

Mosaic (MOS) is gunning for global growth, predicting quicker than expected demand growth for its fertilizers, partly on good weather but also on increasing demand in its emerging market segments.

Mosaic is a global producer and marketer of concentrated phosphate and potash fertilizers serving customers in 40 countries. The company mines phosphate rock in Florida and processes it into finished products at facilities in Florida and Louisiana. It mines potash in Saskatchewan, New Mexico and Michigan.

In addition, the company operates production, blending or distribution operations in Brazil, China, India, Argentina, and Chile, and recently made a strategic equity investment in a new phosphate rock mine in Peru.

"Global demand for crop nutrients has increased sharply, driven by an early and strong spring season in North America, combined with increasing shipments to South America," said Jim Prokopanko, president and CEO of Mosaic, on April 24.

"We expect demand to continue to grow, and crop nutrients to remain affordable. We anticipate another year of high farm income in North America — the second highest on record — and strong farm economics around the world. Our long-term outlook for the business is positive."

Mosaic in fiscal 2011 accounted for approximately 13 percent of estimated global production and 57 percent of estimated North American production of concentrated phosphate crop nutrients. In potash, Mosaic accounted for approximately 12 percent of estimated global production and 38 percent of estimated North American production during the year.

Mosaic has a market cap of $21.06 billion in a sector, chemicals, where the average company size is $9.22 billion. Its trailing 12-month P/E ratio is 10.62 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.69, compared to 1.62 for the sector.

Its projected earnings per share growth for the coming year is 15.49 percent, compared to a sector average of 14.18 percent.

Rising standards


Wall Street is generally positive on Mosaic’s prospects. Merrill Lynch, Stifel Nicolaus, Goldman Sachs, UBS, Credit Suisse, JP Morgan, and Standard & Poor’s all rate it either buy or outperform. Only Thomson Reuters/Verus has the stock at sell.

Expect global demand for fertilizer to keep Mosaic in the black over time, predict S&P analysts. “Longer term, we think earnings will benefit from a secular increase in demand for fertilizers, driven by a combination of population growth and rising living standards worldwide,” they wrote April 24.

Mosaic next reports on July 16.

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