NEW YORK (TheStreet) -- Shares of Mosaic (MOS) were gaining 0.6% to $46.50 on heavy trading volume on Friday after the agricultural chemical company announced its environmental sustainability targets earlier in the week.
In its sustainability report, Mosaic said that it plans to reduce its freshwater use by 10% per tonne of product produced by 2020. The company also plans to reduce total energy use by 10% and greenhouse gas emissions by 10% per tonne of product produced by 2020.
"No element of our company's progress shines more brightly than our commitment to sustainability. Mosaic is leading the crop nutrition industry, and we are leading with purpose," President and CEO Jim Prokopanko said. "We're growing our value to shareholders while achieving measurable and meaningful environmental and social progress."
About 4 million shares of Mosaic were traded by noon Friday, compared to the company's average trading volume of about 3.9 million shares a day.
Insight from TheStreet's Research Team:
A nice rise in fertilizer names early this year was knocked back as drought conditions and farm issues started to pop up. Pricing has always been pretty steady but with more suppliers on line these days, the pricing power has diminished.
We see many of the problems showing up in the charts early, and Mosaic is a great example. However, there is some potential here at least for a bit of upside, and maybe more.
The downtrend line from the drop in early March has been violated and with some confirmation. Mosaic may attack the next resistance line. The Moving Average Convergence Divergence is on a cautious buy signal but I like the slope of the Relative Strength Index. There is a gap at $50, so perhaps that is a good second target.
DISCLOSURE: Trifecta Stocks has no position in MOS. This Alert is a technical analysis of the company's chart, and we are not taking any action in the stock at this time.
TheStreet Ratings team rates MOSAIC CO as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate MOSAIC CO (MOS) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including poor profit margins and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 13.2%. Since the same quarter one year prior, revenues slightly increased by 7.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.38, is low and is below the industry average, implying that there has been successful management of debt levels. To add to this, MOS has a quick ratio of 2.06, which demonstrates the ability of the company to cover short-term liquidity needs.
- Net operating cash flow has slightly increased to $655.50 million or 4.54% when compared to the same quarter last year. Despite an increase in cash flow of 4.54%, MOSAIC CO is still growing at a significantly lower rate than the industry average of 71.46%.
- MOS has underperformed the S&P 500 Index, declining 9.76% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it could be one of the factors that may help make the stock attractive down the road. Right now, however, we believe that it is too soon to buy.
- The gross profit margin for MOSAIC CO is currently lower than what is desirable, coming in at 28.51%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 13.78% is above that of the industry average.
- You can view the full analysis from the report here: MOS Ratings Report