A month has gone by since the last earnings report for Mosaic (MOS). Shares have added about 9.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Mosaic due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Mosaic's Earnings and Revenues Lag Estimates in Q2
Mosaic logged profits of $1,035.9 million or $2.85 per share in second-quarter 2022, up from $437.2 million or $1.14 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $3.64, missing the Zacks Consensus Estimate of $3.93.
Net sales rose roughly 91.8% year over year to $5,373.1 million in the quarter. It missed the Zacks Consensus Estimate by 4.29%. Sales were driven by gains in all segments and higher year-over-year prices.
Net sales in the Potash segment rose to around $1.6 billion in the reported quarter, from $663 million in the prior year’s quarter. The upside was driven by higher prices. Sales volumes in the segment were flat year over year to 2.3 million tons. The segment’s gross margin per ton increased to $403 from $93 in the year-ago quarter.
The Phosphate division’s net sales climbed around 50% year over year to $1.8 billion in second-quarter 2022, driven by higher prices. Sales volumes in the segment fell 15% year over year in the quarter to 1.7 million tons. The gross margin per ton in the quarter was $383, up from $156 in the year-ago quarter.
Net sales in the Mosaic Fertilizantes segment were around $2.3 billion in the quarter, up around 118.1% year over year, driven by higher year-over-year prices. Sales volume in the quarter declined to 2.32 million tons from 2.34 million tons. The gross margin per ton in the quarter was $450, up around 144.6% year over year.
At the end of the quarter, Mosaic had cash and cash equivalents of $839.1 million, up from $769.5 million as of Dec 31, 2021. Long-term debt declined to $3,351.9 million from $3,382.2 million as of Dec 31, 2021.
Net cash provided by operating activities increased roughly 56.2% year over year to $1,585.1 million in the reported quarter.
The company noted that it expects tight grain and oilseed markets to persist through the balance of 2022 and into 2023. The war in Ukraine, high temperatures in North America and Europe, and developing drought conditions in parts of South America underscore the risk for lower yields globally, Mosaic stated.
Domestic crop prices continue to justify nutrient application to drive higher yields in North America, Brazil and China, notwithstanding higher input costs. The Indian government continues to support importers to ensure ample domestic supply. While domestic inventories remain at historically low levels in India, shipments have increased in recent weeks, Mosaic noted.
The company forecasts total capital expenditures of $1.3 billion for full-year 2022. It projects selling, general and administrative expenses in the range of $420-$450 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
Currently, Mosaic has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Mosaic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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