Mosaic Co Stock Buy Recommendation Reiterated (MOS)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK (TheStreet) -- Mosaic (NYSE:MOS) has been reiterated by TheStreet Ratings as a buy with a ratings score of B- . The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

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Highlights from the ratings report include:

• MOS's debt-to-equity ratio is very low at 0.08 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.67, which clearly demonstrates the ability to cover short-term cash needs.
• The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Chemicals industry average. The net income increased by 0.8% when compared to the same quarter one year prior, going from $623.60 million to $628.80 million.
• MOS, with its decline in revenue, underperformed when compared the industry average of 3.8%. Since the same quarter one year prior, revenues fell by 16.0%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
• MOSAIC CO has improved earnings per share by 5.0% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MOSAIC CO reported lower earnings of $4.40 versus $5.62 in the prior year. For the next year, the market is expecting a contraction of 3.3% in earnings ($4.26 versus $4.40).
• In its most recent trading session, MOS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

The Mosaic Company produces and markets concentrated phosphate and potash crop nutrients for the agriculture industry worldwide. Mosaic has a market cap of $17.26 billion and is part of the basic materials sector and chemicals industry. The company has a P/E ratio of 13.4, below the S&P 500 P/E ratio of 17.7. Shares are up 2.7% year to date as of the close of trading on Thursday.

You can view the full Mosaic Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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