Mosaic (MOS) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.Since a chang ...

Core Insights - The Mosaic Company has completed the sale of its inactive Patos de Minas phosphate mining unit in Brazil to Fosfatados Centro for $111 million, with an expected book gain of $80-$90 million in Q4 2025 [1][7] Strategic Rationale - The sale allows Mosaic to free up capital from a non-core asset, enabling reinvestment into higher-return opportunities [2] - The transaction received necessary regulatory approvals, including from the Brazilian Administrative Council for Economic Defense [2] Operational Focus - Mosaic is prioritizing the optimization of returns from its core, actively operating assets, directing future capital towards high-performing phosphate and potash operations [3] - The company aims to advance innovation and enhance its overall product portfolio [3] Regional Presence - The transaction enables Mosaic to maintain a strong commercial presence in Brazil without the burden of underutilized assets, reflecting a refined focus on growth and operational excellence [4] - Brazil remains a critical market for Mosaic, and the exit from this site does not indicate a retreat [4] Production Forecast - For full-year 2025, Mosaic expects phosphate production of 6.9-7.2 million tons and potash output of 9.3-9.5 million tons [5] - Phosphate sales volumes for Q3 2025 are projected to be between 1.8-2.0 million tons, while potash volumes are forecasted at 2.2-2.4 million tons [5]

Core Viewpoint - Mosaic Company is a leading player in the global fertilizer industry, focusing on phosphate and potash production to meet the increasing agricultural demand [1] Group 1: Stock Performance and Market Position - UBS has set a price target of $44 for Mosaic Company, indicating a potential price increase of about 26.34% from its trading price of $34.83 [2][6] - The company's stock has surged by 40.5% year-to-date, outperforming the Zacks Fertilizers industry's gain of 24.4% [2][6] - Currently, Mosaic is trading at $35.04, with a market capitalization of approximately $11.12 billion and a trading volume of 855,903 shares [5] Group 2: Strategic Initiatives and Growth Prospects - Mosaic is implementing strategic cost-cutting measures aimed at achieving $250 million in savings by 2026, which is expected to enhance profitability [3][6] - Analysts have increased earnings estimates for 2025 by 13.2%, reflecting confidence in Mosaic's future performance and growth prospects [4]

Group 1 - The Mosaic Company has completed the sale of its idled Patos de Minas phosphate mining unit in Brazil to Fosfatados Centro SPE Ltda [1]

Core Insights - The Mosaic Company (MOS) is experiencing growth due to favorable demand for phosphate and potash, high-return investments, and cost structure improvements, further supported by rising fertilizer prices [1][10] Industry Demand - Strong global demand for fertilizers is driven by favorable agricultural conditions and attractive farm economics, with high demand for grains and oilseeds [2][3] - In North America, favorable farmer economics and the need to replenish soil nutrients are contributing to increased fertilizer demand [3] - Brazil's fertilizer demand is expected to rise due to healthy grower economics and low inventory levels, while India is also anticipated to see increased demand supported by government initiatives [3] Cost Structure and Profitability - MOS is implementing transformation plans aimed at improving its operating cost structure, targeting $250 million in run-rate cost reductions by the end of 2026, with $150 million already achieved [4][10] - Cost reductions are expected through supply chain optimization, administrative automation, and operational cost cuts [4] Investment and Capacity Expansion - MOS is committed to high-return investments with moderate capital expenditures, including the completion of an 800,000-ton MicroEssentials capacity conversion and the Esterhazy Hydrofloat project, which added 400,000 tons in milling capacity [5][6] - The Hydrofloat project will enable the production of low-cost potash, and a new blending and distribution center in Brazil is expected to increase sales by 1 million tons [6] Financial Performance - MOS generated an operating cash flow of $610 million and free cash flow of $305 million in Q2 2025, with expectations for stronger cash flow in the second half of 2025 [7] - The company plans to use its cash flow for debt reduction and shareholder returns through dividends and buybacks [7] Production Outlook - For full-year 2025, MOS expects phosphate production volumes between 6.9 million and 7.2 million tons, and potash production projected at 9.3 million to 9.5 million tons [8]

Group 1 - The core thesis of the previous analysis on Mosaic (NYSE: MOS) is that the stock is undervalued as it is treated merely as a commodity producer, despite showing signs of stronger fundamentals [1] Group 2 - The analysis emphasizes the importance of recognizing the long-term potential of companies like Mosaic, which may not be reflected in their current stock price [1]

Company Performance - Gold Fields (GFI) has returned 217.9% year-to-date, significantly outperforming the Basic Materials sector, which has gained about 24.1% on average [4] - The Zacks Consensus Estimate for GFI's full-year earnings has increased by 7% over the past quarter, indicating improved analyst sentiment and a more positive earnings outlook [3] Industry Context - Gold Fields is part of the Mining - Gold industry, which includes 42 individual stocks and currently ranks 67 in the Zacks Industry Rank. This industry has an average gain of 120.5% year-to-date, showing that GFI is performing better than its peers [5] - In comparison, Mosaic (MOS), another stock in the Basic Materials sector, has returned 41.1% year-to-date and belongs to the Fertilizers industry, which has gained 23.7% this year and ranks 19 [4][6]

Core Insights - Investing in stocks based on valuation metrics, particularly the price-to-sales (P/S) ratio, can identify opportunities with strong upside potential, especially for unprofitable or early-stage companies [1][2][3] Valuation Metrics - The P/S ratio compares a company's market capitalization to its revenues, providing a clearer picture of value when earnings are minimal or volatile [2][5] - A P/S ratio below 1 indicates a good bargain, as investors pay less than a dollar for each dollar of revenue generated [6] - The P/S ratio is preferred over the price-to-earnings (P/E) ratio due to the difficulty of manipulating sales figures compared to earnings [7][10] Investment Opportunities - Low P/S stocks can offer compelling opportunities, often trading below their intrinsic value, making them attractive for investors seeking upside potential [3][10] - Companies with low P/S ratios identified as potential investment opportunities include: - Macy's Inc. (M) [4][12] - Oshkosh Corporation (OSK) [4][14] - Green Dot (GDOT) [4][16] - The Mosaic Company (MOS) [4][18] - PagSeguro Digital (PAGS) [4][20] Company Profiles - **Macy's Inc. (M)**: Undergoing a transformation with its Bold New Chapter program, focusing on digital initiatives and omnichannel retailing, currently has a Value Score of A and Zacks Rank 1 [12][13] - **Oshkosh Corporation (OSK)**: Engaged in custom-built vehicles and equipment, focusing on electrification and innovation, currently has a Value Score of B and Zacks Rank 2 [14][15] - **Green Dot (GDOT)**: A leader in prepaid cards and Banking-as-a-Service, with strong partnerships and a solid balance sheet, currently has a Value Score of A and Zacks Rank 1 [16][17] - **The Mosaic Company (MOS)**: A major producer of phosphate and potash, benefiting from strong demand and cost transformation efforts, currently has a Value Score of A and Zacks Rank 2 [18][19] - **PagSeguro Digital (PAGS)**: Offers a suite of financial solutions in Brazil, focusing on digital banking and innovation, currently has a Value Score of B and Zacks Rank 1 [20][21]

Company Overview - The Mosaic Company is headquartered in Tampa, Florida, and specializes in phosphate and potash products, serving fields and industries with fertilizers, animal feed ingredients, and specialty nutrients [1] - With a market capitalization of approximately $11.4 billion, Mosaic is classified as a "large-cap" company, indicating size, stability, and extensive reach [2] Stock Performance - Currently, Mosaic's stock trades about 6% below its 52-week high of $38.23, reached in July, with a modest increase of 1.1% over the past three months [3] - Over the last 52 weeks, Mosaic's stock has appreciated by 40.4%, and year-to-date, it has risen by 46.2%, outperforming the VanEck Agribusiness ETF (MOO), which has gained 14.4% this year [4] Technical Analysis - Since mid-August, Mosaic's stock had been trading below its 50-day and 200-day moving averages, indicating a bearish trend; however, it has recently regained ground, trading above both averages of $33.93 and $30.45, suggesting a bullish trend [5] Earnings Report - On August 6, Mosaic's shares fell approximately 13.3% following disappointing Q2 fiscal 2025 earnings, where revenue grew 6.7% year-over-year to $3 billion but fell short of the expected $3.13 billion; adjusted EPS decreased by 5.6% to $0.51, below the anticipated $0.67 [6] Future Outlook - Despite recent setbacks, Mosaic's management has adjusted its outlook positively, with phosphate production guidance for 2025 set at 6.9-7.2 million tons and potash output increased to 9.3-9.5 million tons [7] - For Q3, phosphate prices are projected to be between $700-$720 per ton, which is expected to enhance revenue and improve investor sentiment, indicating a potential recovery in performance [8]

Core Insights - The Mosaic Company (MOS) is enhancing its operating cost structure through transformation plans aimed at improving profitability, with a target of $250 million in run-rate cost reductions by the end of 2026, having already achieved $150 million in cost reductions from previous targets [1][3]. Cost Savings and Financial Performance - As of June 30, 2025, MOS achieved $161 million in cost savings, with $106 million from the Mosaic Fertilizantes segment and $55 million from reductions in selling, general, and administrative expenses (SG&A) [2][7]. - The cost-cutting measures contributed to a 66% year-over-year increase in adjusted EBITDA to $159 million in the Mosaic Fertilizantes segment for the second quarter [2]. Future Cost Reduction Plans - MOS is committed to achieving an additional $90 million in cost reductions through supply chain optimization, automation of administrative functions, absorption of fixed costs, and operational cost cuts [3]. - The company expects to benefit from these cost-control measures and higher realized prices, which are anticipated to enhance margins in the latter half of 2025 [3]. Industry Comparisons - Nutrien Ltd. (NTR) is also focused on reducing production costs in the potash business, with a goal of achieving around $200 million in total savings this year, indicating a proactive approach to cost management within the industry [4]. - CF Industries Holdings, Inc. (CF) faced increased natural gas costs and SG&A expenses, with the average cost of natural gas rising to $3.36 per MMBtu in the second quarter, reflecting industry-wide challenges [5]. Stock Performance and Valuation - MOS has gained 39.2% year-to-date, outperforming the Zacks Fertilizers industry's rise of 19.1% [6]. - Currently, MOS trades at a forward 12-month earnings multiple of 11.79, which is approximately 8.9% lower than the industry average of 12.95X, indicating a potential value opportunity [6]. Earnings Estimates - The Zacks Consensus Estimate for MOS' earnings implies a year-over-year rise of 60.1% for 2025, followed by a decline of 11.8% for 2026, with EPS estimates trending higher over the past 60 days [10].