Mosaic Case Study

The Mosaic Company (MOS) reported adjust 3Q14 EPS of $0.56 missing Street estimates of $0.59. The headline EPS was adjusted by -$0.02 for restructuring expenses, adjustments to Argentine assets, severance and various gains/losses. The company reported $438 million of gross profit with strong phosphate results offset by weaker potash and corporate/other results.
Management Trying Hard Trying Hard To Make A Bullish Case
The tougher operating environment for much of the fertilizer industry continues amid lower grain prices and the need for farmers to start thinking about cutting costs. Such are the challenges the industry is facing that investors are less interested in quarter miss or beat and more on the uncertainty around the pending planting season and all the related worries on fertilizer demand, farm income, planted acreage, etc. Even Mosaic’s CEO acknowledged in the most recent earnings call that markets were relatively uninterested in the company’s quarterly performance relative to the uncertainties facing the fertilizer industry.

Management believes that the anticipated negative impact on potash and phosphate shipments from under pressure grain prices will be reduced by farmers’ need to replenish soil nutrients after a large harvest, the advantages to growers of maintaining a consistent application level through ups and downs in the agricultural cycle, and fertilizer prices that remain affordable relative to historical costs. Despite of Mosaic’s management trying to make a reasonable case there is little in the current agricultural outlook to generate bullish sentiment on most of fertilizer names including