Mosaic Company was one of the market's biggest losers today, losing -3.25% of its value and underperforming the S&P500 and Dow Industrial composite indices by 2.29% and 2.6% respectively. The large-cap Industrials company ended the day at $50.83, closing in on its 52 week high low of $41.75 and is 7.7% below its average target price of $55.07. Over the last 12 months, Mosaic Company is down -14.5%, and has underperformed the S&P 500 by 7.7%. The stock has an average analyst rating of hold.
Mosaic Company has a trailing 12 month price to earnings (P/E) ratio of 5, which corresponds to its share price divided by its trailing earnings per share (EPS) of $10.06. The company's forward P/E ratio is 8.3 based on its forward EPS of $5.99.
Earnings refer to the net income of the company from its sales operations, and the P/E ratio tells us how much investors are willing to pay for each dollar of these earnings. By way of comparison, the Industrials sector has historically had an average P/E ratio of 20.49. Whether the company's P/E ratio is within a high or low range tells us how investors are currently valuing the stock's earning potential, but it doesn't tell us how its price will move in the future.
Another metric for valuing a stock is its Price to Book (P/B) Ratio, which is its share price divided by its book value per share. The book value refers to the sum of all of the company's tangible assets and liabilities. Mosaic Company's P/B ratio of 1.335 indicates that the company is fairly valued when compared to the Industrials sector's average P/B ratio of 3.78.
To understand Mosaic Company's business, and therefore its attractiveness as a potential investment, we must analyze its margins in two steps. First, we look at its gross margins, which take into account only the direct cost of providing the product or service to the customer. This enables us to determine whether the company benefits from an advantageous market position:
| Date Reported | Revenue (k) | Cost of Revenue (k) | Gross Margin | YoY Growth |
|---|---|---|---|---|
| 2022-12-31 | $19,125,200 | $13,369,400 | 30.1% | 16.22% |
| 2021-12-31 | $12,357,400 | $9,157,100 | 25.9% | 111.08% |
| 2020-12-31 | $8,681,700 | $7,616,800 | 12.27% | 21.85% |
| 2019-12-31 | $8,906,300 | $8,009,000 | 10.07% | -35.57% |
| 2018-12-31 | $9,587,300 | $8,088,900 | 15.63% | n/a |
- Average gross margins: 18.79 %
- Average gross margins growth rate: 22.72 %
- Coefficient of variability (lower numbers indicate more stability): 47 %
Next, we consider the Mosaic Company's operating margins, which take into account overhead. This tells us whether the company's business model is fundamentally profitable or not:
| Date Reported | Revenue (k) | Operating Expenses (k) | Operating Margin | YoY Growth |
|---|---|---|---|---|
| 2022-12-31 | $19,125,200 | $731,700 | 25.02% | 25.23% |
| 2021-12-31 | $12,357,400 | $552,200 | 19.98% | 319.75% |
| 2020-12-31 | $8,681,700 | $518,900 | 4.76% | 138.73% |
| 2019-12-31 | $8,906,300 | $1,075,800 | -12.29% | -226.96% |
| 2018-12-31 | $9,587,300 | $457,900 | 9.68% | n/a |
- Average operating margins: 9.43 %
- Average operating margins growth rate: 51.35 %
- Coefficient of variability (lower numbers indicate more stability): 154 %
Since both Mosaic Company's gross margins and operating margins tend to be positive, we know that its business is currently profitable. However, it's important to take into account their variability and overall growth trend to make a definitive conclusion regarding the company's strength.
To get a better idea of Mosaic Company's finances, we will now look at its cash flows. Often touted as a general yardstick for a company's financial health, cash flows represent the sum of inflows and outflows of cash from all sources, including capital expenditures:
| Date Reported | Cash Flow from Operations (k) | Capital Expenditures (k) | Free Cash Flow (k) | YoY Growth |
|---|---|---|---|---|
| 2022-12-31 | $3,935,800 | $1,247,300 | $2,688,500 | 199.25% |
| 2021-12-31 | $2,187,000 | $1,288,600 | $898,400 | 118.06% |
| 2020-12-31 | $1,582,600 | $1,170,600 | $412,000 | 333.03% |
| 2019-12-31 | $1,095,400 | $1,272,200 | -$176,800 | -138.83% |
| 2018-12-31 | $1,409,800 | $954,500 | $455,300 | n/a |
- Average free cash flow: $2,688,500,000
- Average free cash flow growth rate: 102.3 %
- Coefficient of variability (lower numbers indicating more stability): 128%
This is the pool of liquidity that the company can use to reinvest in its business and to pay its equity investors a dividend. Investors in Mosaic Company enjoy a dividend yield of 1.52%, and they can expect this to continue based on the company's positive cash flows.
Overall, Mosaic Company seems to be a strong business with an attractive valuation in numeric terms. Potential investors may want to take a closer look at the stock, and focus on whether it also has qualitative factors that show that it can provide solid returns.
