Mosaic Co Valuation – March 2019 #MOS

Company Profile (excerpt from Reuters): The Mosaic Company, incorporated on March 25, 2004, is a producer and marketer of concentrated phosphate and potash crop nutrients. The Company operates through three segments: Phosphates, Potash and International Distribution. Through its product offering, the Company is a single source supplier of phosphate- and potash-based crop nutrients and animal feed ingredients. As of December 31, 2016, the Company served customers in approximately 40 countries.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MOS – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

 

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,762,322,429 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.71 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Pass
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -74.18% Fail
6. Moderate PEmg Ratio PEmg < 20 21.78 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.02 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.71 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.56 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.28
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade C-
MG Value based on 3% Growth $18.59
MG Value based on 0% Growth $10.90
Market Implied Growth Rate 6.64%
Current Price $27.92
% of Intrinsic Value N/A

Mosaic Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.49 in 2015 to an estimated $1.28 for 2019. This level of demonstrated earnings growth does not support the market’s implied estimate of 6.64% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Mosaic Co revealed the company was trading below its Graham Number of $36.16. The company pays a dividend of $0.1 per share, for a yield of 0.4% Its PEmg (price over earnings per share – ModernGraham) was 21.78, which was below the industry average of 31.74, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-13.62.

Mosaic Co receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$13.62
Graham Number $36.16
PEmg 21.78
Current Ratio 1.71
PB Ratio 1.02
Current Dividend $0.10
Dividend Yield 0.36%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

 

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Total Current Assets $4,237,000,000
Total Current Liabilities $2,483,700,000
Long-Term Debt $4,491,500,000
Total Assets $20,119,200,000
Intangible Assets $1,707,500,000
Total Liabilities $9,514,500,000
Shares Outstanding (Diluted Average) 387,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $2.16
Dec2018 $1.22
Dec2017 -$0.31
Dec2016 $0.85
Dec2015 $2.78
Dec2014 $2.68
May2013 $4.42
May2012 $4.42
May2011 $5.62
May2010 $1.85
May2009 $5.27
May2008 $4.67
May2007 $0.95
May2006 -$0.35
May2005 $0.46
Dec2003 -$1.22
Dec2002 -$0.97
Dec2001 -$0.57
Dec2000 -$3.00
Dec1999 -$6.75
Dec1998 -$0.08

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.28
Dec2018 $1.04
Dec2017 $1.33
Dec2016 $2.44
Dec2015 $3.49
Dec2014 $3.83
May2013 $4.37
May2012 $4.36
May2011 $4.11
May2010 $3.06
May2009 $3.18
May2008 $1.72
May2007 $0.09
May2006 -$0.41
May2005 -$0.64
Dec2003 -$1.63
Dec2002 -$1.98

Recommended Reading:

Other ModernGraham posts about the company

Mosaic Company Valuation – May 2018 $MOS
Most Overvalued Stocks of the S&P 500 – March 2017
Mosaic Company Valuation – February 2017 $MOS
Mosaic Company Valuation – October 2015 Update $MOS
Mosaic Company Analysis – July 2015 Update $MOS

Other ModernGraham posts about related companies

CF Industries Holdings Inc Valuation – February 2019 $CF
Scotts Miracle Gro Co Valuation – August 2018 $SMG
Intrepid Potash Inc Valuation – July 2018 $IPI
Mosaic Company Valuation – May 2018 $MOS
CF Industries Holdings Inc Valuation – April 2018 $CF
LSB Industries Inc Valuation – Initial Coverage $LXU
Monsanto Company Valuation – March 2017 $MON
Mosaic Company Valuation – February 2017 $MOS
Scotts Miracle-Gro Inc Valuation – Initial Coverage $SMG
Intrepid Potash Inc Valuation – Initial Coverage $IPI

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Science Applications International Corp Valuation – July 2018 $SAIC

Company Profile (excerpt from Reuters): Science Applications International Corporation (SAIC), incorporated on February 1, 2013, is a provider of technical, engineering and enterprise information technology (IT) services. The Company provides its services primarily to the United States Government, including the Department of Defense (DoD), the intelligence community and federal civilian agencies. The Company provides engineering, systems integration and information technology offerings for government projects, and offers a range of services with a targeted emphasis on higher-end, differentiated technology services.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of SAIC – July 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,447,240,116 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 37700.00% Pass
6. Moderate PEmg Ratio PEmg < 20 22.54 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.89 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.13 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $3.62
MG Growth Estimate 15.00%
MG Value $139.34
Opinion Undervalued
MG Grade C-
MG Value based on 3% Growth $52.48
MG Value based on 0% Growth $30.76
Market Implied Growth Rate 7.02%
Current Price $81.57
% of Intrinsic Value 58.54%

Science Applications International Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.58 in 2015 to an estimated $3.62 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 7.02% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Science Applications International Corp revealed the company was trading above its Graham Number of $26.35. The company pays a dividend of $1.24 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 22.54, which was below the industry average of 45.08, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-18.57.

Science Applications International Corp receives an average overall rating in the ModernGraham grading system, scoring a C-.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$18.57
Graham Number $26.35
PEmg 22.54
Current Ratio 1.34
PB Ratio 10.89
Current Dividend $1.24
Dividend Yield 1.52%
Number of Consecutive Years of Dividend Growth 5

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 4/1/2018
Total Current Assets $930,000,000
Total Current Liabilities $695,000,000
Long-Term Debt $971,000,000
Total Assets $2,061,000,000
Intangible Assets $1,037,000,000
Total Liabilities $1,736,000,000
Shares Outstanding (Diluted Average) 43,400,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $4.20
Jan2018 $4.02
Jan2017 $3.12
Jan2016 $2.47
Jan2015 $2.91
Jan2014 $2.27

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $3.62
Jan2018 $3.21
Jan2017 $2.58
Jan2016 $2.05
Jan2015 $1.58
Jan2014 $0.76

Recommended Reading:

Other ModernGraham posts about the company

Science Applications International Corp Valuation – Initial Coverage $SAIC

Other ModernGraham posts about related companies

Infosys Ltd Valuation – June 2018 $INFY
Verisign Inc Valuation – May 2018 $VRSN
Motorola Solutions Inc Valuation – May 2018 $MSI
Leidos Holdings Inc Valuation – April 2018 $LDOS
Gartner Inc Valuation – March 2018 $IT
Cognizant Technology Solutions Corp – March 2018 $CTSH
International Business Machines Corp Valuation – February 2018 $IBM
Viavi Solutions Inc Valuation – Initial Coverage $VIAV
Equinix Inc Valuation – July 2017 $EQIX
Liquidity Services Inc Valuation – Initial Coverage $LQDT

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Mosaic Company Valuation – May 2018 $MOS

Company Profile (excerpt from Reuters): The Mosaic Company, incorporated on March 25, 2004, is a producer and marketer of concentrated phosphate and potash crop nutrients. The Company operates through three segments: Phosphates, Potash and International Distribution. Through its product offering, the Company is a single source supplier of phosphate- and potash-based crop nutrients and animal feed ingredients. As of December 31, 2016, the Company served customers in approximately 40 countries.

MOS Chart

MOS data by YCharts

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of MOS – May 2018

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $10,625,916,245 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.73 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -86.34% Fail
6. Moderate PEmg Ratio PEmg < 20 26.59 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.01 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.73 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.98 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

 

Stage 2: Determination of Intrinsic Value

EPSmg $1.04
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $15.03
MG Value based on 0% Growth $8.81
Market Implied Growth Rate 9.05%
Current Price $27.57
% of Intrinsic Value N/A

Mosaic Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, and the poor dividend history, and the high PEmg ratio. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $3.83 in 2014 to an estimated $1.04 for 2018. This level of demonstrated earnings growth does not support the market’s implied estimate of 9.05% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Mosaic Co revealed the company was trading above its Graham Number of $27.2. The company pays a dividend of $0.6 per share, for a yield of 2.2%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 26.59, which was above the industry average of 24.96. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-16.03.

Mosaic Co scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$16.03
Graham Number $27.20
PEmg 26.59
Current Ratio 1.73
PB Ratio 1.01
Current Dividend $0.60
Dividend Yield 2.18%
Number of Consecutive Years of Dividend Growth 0

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 3/1/2018
Total Current Assets $3,841,400,000
Total Current Liabilities $2,220,500,000
Long-Term Debt $4,823,100,000
Total Assets $20,452,300,000
Intangible Assets $1,760,600,000
Total Liabilities $9,997,300,000
Shares Outstanding (Diluted Average) 384,100,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $1.20
Dec2017 -$0.31
Dec2016 $0.85
Dec2015 $2.78
Dec2014 $2.68
May2013 $4.42
May2012 $4.42
May2011 $5.62
May2010 $1.85
May2009 $5.27
May2008 $4.67
May2007 $0.95
May2006 -$0.35
May2005 $0.46
Dec2003 -$1.22
Dec2002 -$0.97
Dec2001 -$0.57
Dec2000 -$3.00
Dec1999 -$6.75
Dec1998 -$0.08
Jun1997 $2.03

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $1.04
Dec2017 $1.33
Dec2016 $2.44
Dec2015 $3.49
Dec2014 $3.83
May2013 $4.37
May2012 $4.36
May2011 $4.11
May2010 $3.06
May2009 $3.18
May2008 $1.72
May2007 $0.09
May2006 -$0.41
May2005 -$0.64
Dec2003 -$1.63
Dec2002 -$1.98
Dec2001 -$2.22

Recommended Reading:

Other ModernGraham posts about the company

Most Overvalued Stocks of the S&P 500 – March 2017
Mosaic Company Valuation – February 2017 $MOS
Mosaic Company Valuation – October 2015 Update $MOS
Mosaic Company Analysis – July 2015 Update $MOS
Mosaic Inc. Quarterly Valuation – April 2015 $MOS

Other ModernGraham posts about related companies

CF Industries Holdings Inc Valuation – April 2018 $CF
LSB Industries Inc Valuation – Initial Coverage $LXU
Monsanto Company Valuation – March 2017 $MON
Mosaic Company Valuation – February 2017 $MOS
Scotts Miracle-Gro Inc Valuation – Initial Coverage $SMG
Intrepid Potash Inc Valuation – Initial Coverage $IPI
CF Industries Holdings Inc Valuation – August 2016 $CF
CF Industries Valuation – March 2016 $CF
Monsanto Company Valuation – January 2016 Update $MON
Mosaic Company Valuation – October 2015 Update $MOS

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Mosaic Company Valuation – February 2017 $MOS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – February 2017.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Mosaic Company (MOS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Mosaic Company is a producer and marketer of concentrated phosphate and potash crop nutrients. The Company’s segments include Phosphates, Potash and International Distribution. Its Phosphates Segment sells phosphate-based crop nutrients and animal feed ingredients throughout North America and internationally. The Company’s Phosphates business segment owns and operates mines and production facilities in Florida, which produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and processing plants in Louisiana, which produce concentrated phosphate crop nutrients. Its Potash segment mines and processes potash in Canada and the United States. Its Potash Segment sells potash throughout North America and internationally. Its International Distribution Segment consists of sales offices, crop nutrient blending and bagging facilities, port terminals and warehouses in Brazil, Paraguay, India and China.

MOS Chart

MOS data by YCharts

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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MOS – February 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $11,358,674,961 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.78 Fail
3. Earnings Stability Positive EPS for 10 years prior Pass
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -42.52% Fail
6. Moderate PEmg Ratio PEmg < 20 13.27 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.15 Pass
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.78 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 2.29 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $2.43
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $35.21
MG Value based on 0% Growth $20.64
Market Implied Growth Rate 2.39%
Current Price $32.23
% of Intrinsic Value N/A

Mosaic Co does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings growth over the last ten years, and the poor dividend history. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings growth over the last five years. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $4.36 in 2012 to an estimated $2.43 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 2.39% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Mosaic Co revealed the company was trading above its Graham Number of $22.48. The company pays a dividend of $1.1 per share, for a yield of 3.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.27, which was above the industry average of 13.11. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-11.32.

Mosaic Co scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$11.32
Graham Number $22.48
PEmg 13.27
Current Ratio 1.78
PB Ratio 1.15
Current Dividend $1.10
Dividend Yield 3.41%
Number of Consecutive Years of Dividend Growth 2

[/not-level-free]

Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $3,449,200,000
Total Current Liabilities $1,939,400,000
Long-Term Debt $3,450,300,000
Total Assets $17,263,200,000
Intangible Assets $1,651,600,000
Total Liabilities $7,426,500,000
Shares Outstanding (Diluted Average) 351,500,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $0.80
Dec2015 $2.78
Dec2014 $2.68
May2013 $4.42
May2012 $4.42
May2011 $5.62
May2010 $1.85
May2009 $5.27
May2008 $4.67
May2007 $0.95
May2006 -$0.35
May2005 $0.46
Dec2003 -$1.22
Dec2002 -$0.97
Dec2001 -$0.57
Dec2000 -$3.00
Dec1999 -$6.75
Dec1998 -$0.08
Jun1997 $2.03
Jun1996 $1.56
Jun1995 $1.94

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $2.43
Dec2015 $3.49
Dec2014 $3.83
May2013 $4.37
May2012 $4.36
May2011 $4.11
May2010 $3.06
May2009 $3.18
May2008 $1.72
May2007 $0.09
May2006 -$0.41
May2005 -$0.64
Dec2003 -$1.63
Dec2002 -$1.98
Dec2001 -$2.22
Dec2000 -$2.44
Dec1999 -$1.53

Recommended Reading:

Other ModernGraham posts about the company

Mosaic Company Valuation – October 2015 Update $MOS
Mosaic Company Analysis – July 2015 Update $MOS
Mosaic Inc. Quarterly Valuation – April 2015 $MOS
34 Companies in the Spotlight This Week – 2/7/15
Mosaic Company Quarterly Valuation – January 2015 $MOS

Other ModernGraham posts about related companies

Scotts Miracle-Gro Inc Valuation – Initial Coverage $SMG
Intrepid Potash Inc Valuation – Initial Coverage $IPI
CF Industries Holdings Inc Valuation – August 2016 $CF
CF Industries Valuation – March 2016 $CF
Monsanto Company Valuation – January 2016 Update $MON
Mosaic Company Valuation – October 2015 Update $MOS
CF Industries Holdings Inc. Analysis – September 2015 Update $CF
Monsanto Company Analysis – September 2015 Update $MON
Mosaic Company Analysis – July 2015 Update $MOS
CF Industries Holdings Analysis – June 2015 Update $CF

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Science Applications International Corp Valuation – Initial Coverage $SAIC

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – August 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Science Applications International Corp (SAIC) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Science Applications International Corporation (SAIC) is a provider of technical, engineering and enterprise information technology (IT) services. The Company provides its services primarily to the United States Government, including the Department of Defense (DoD), the intelligence community and federal civilian agencies. The Company provides engineering, systems integration and information technology offerings for government projects, and offers a range of services with a targeted emphasis on higher-end, differentiated technology services. The Company’s offerings include engineering; technology and equipment platform integration; maintenance of ground and maritime systems; logistics; training and simulation; operation and program support services, and end-to-end services spanning the design, development, integration, deployment, management and operations, sustainment and security of its customers’ entire IT infrastructure.

SAIC Chart

SAIC data by YCharts

[level-free]
To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.

[/level-free]
[not-level-free]

Downloadable PDF version of this valuation:

moderngraham-valuation-of-saic-november-2016

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,507,431,445 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.34 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 591.06% Pass
6. Moderate PEmg Ratio PEmg < 20 28.70 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 10.28 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.34 Fail
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 4.22 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

saic-value-chart-november-2016

EPSmg $2.83
MG Growth Estimate 0.78%
MG Value $28.43
Opinion Overvalued
MG Grade D
MG Value based on 3% Growth $41.00
MG Value based on 0% Growth $24.03
Market Implied Growth Rate 10.10%
Current Price $81.15
% of Intrinsic Value 285.45%

Science Applications International Corp does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability over the last ten years, and the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the current assets. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after growing its EPSmg (normalized earnings) from $2.69 in 2013 to an estimated $2.83 for 2017. This level of demonstrated earnings growth does not support the market’s implied estimate of 10.1% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Science Applications International Corp revealed the company was trading above its Graham Number of $24.07. The company pays a dividend of $1.24 per share, for a yield of 1.5% Its PEmg (price over earnings per share – ModernGraham) was 28.7, which was below the industry average of 35.13, which by some methods of valuation makes it one of the most undervalued stocks in its industry. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-17.17.

Science Applications International Corp scores quite poorly in the ModernGraham grading system, with an overall grade of D.

Stage 3: Information for Further Research

saic-charts-november-2016

Net Current Asset Value (NCAV) -$17.17
Graham Number $24.07
PEmg 28.70
Current Ratio 1.34
PB Ratio 10.28
Current Dividend $1.24
Dividend Yield 1.53%
Number of Consecutive Years of Dividend Growth 4

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 7/16/2016
Total Current Assets $914,000,000
Total Current Liabilities $681,000,000
Long-Term Debt $984,000,000
Total Assets $2,067,000,000
Intangible Assets $1,073,000,000
Total Liabilities $1,704,000,000
Shares Outstanding (Diluted Average) 46,000,000

Earnings Per Share History

Next Fiscal Year Estimate $3.12
Jan2016 $2.47
Jan2015 $2.91
Jan2014 $2.27
Jan2013 $3.66
Jan2012 $3.66
Jan2011 $1.64
Jan2010 $1.23

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.83
Jan2016 $2.79
Jan2015 $2.90
Jan2014 $2.77
Jan2013 $2.69
Jan2012 $1.90
Jan2011 $0.87
Jan2010 $0.41

Recommended Reading:

Other ModernGraham posts about the company

None.  This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

ACI Worldwide Inc Valuation – November 2016 $ACIW
Equinix Inc Valuation – August 2016 $EQIX
Qualcomm Inc Valuation – August 2016 $QCOM
Verisign Inc Valuation – August 2016 $VRSN
Akamai Technologies Inc Valuation – August 2016 $AKAM
Motorola Solutions Inc Valuation – August 2016 $MSI
F5 Networks Inc Valuation – July 2016 $FFIV
Computer Sciences Corp Valuation – July 2016 $CSC
Infosys Ltd Valuation – July 2016 $INFY
Cognizant Technology Solutions Corp Valuation – July 2016 $CTSH

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Mosaic Company Valuation – October 2015 Update $MOS

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Most Undervalued Companies for the Defensive Investor – September 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Mosaic Company (MOS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Mosaic Company is a producer and marketer of concentrated phosphate and potash crop nutrients. The Company is a single source supplier of phosphate and potash-based crop nutrients and animal feed ingredients. It operates in two segments. The Phosphates segment owns and operates mines and production facilities in Florida, which produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and processing plants in Louisiana, which produce concentrated phosphate crop nutrients. The Potash segment owns and operates potash mines and production facilities in Canada and the United States, which produce potash-based crop nutrients, animal feed ingredients and industrial products. It mines phosphate rock in Florida and process rock into finished phosphate products at facilities in Florida and Louisiana. It also mines potash in Saskatchewan and New Mexico. The Company has other production, blending or distribution operations in Brazil, China, India and Paraguay.

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Downloadable PDF version of this valuation:

ModernGraham Valuation of MOS – October 2015

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $12,056,025,923 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 2.71 Pass
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 93.74% Pass
6. Moderate PEmg Ratio PEmg < 20 9.54 Pass
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.23 Pass
Score
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 2.71 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 1.17 Fail
3. Earnings Stability Positive EPS for 5 years prior Pass
4. Dividend Record Currently Pays Dividend Pass
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

MOS value Chart October 2015

EPSmg $3.60
MG Growth Estimate -1.85%
MG Value $17.25
Opinion Overvalued
MG Value based on 3% Growth $52.19
MG Value based on 0% Growth $30.59
Market Implied Growth Rate 0.52%
Current Price $34.35
% of Intrinsic Value 199.08%

Mosaic Company does not qualify for either the Enterprising Investor or the more conservative Defensive Investor.  The Defensive Investor is concerned with the short dividend history and the insufficient earnings stability over the last ten years.  The Enterprising Investor is concerned by the level of debt relative to the net current assets and the lack of earnings growth over the last five years.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should explore other opportunities at this time or proceed with a cautious speculative attitude.

As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $4.11 in 2011 to an estimated $3.60 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 0.52% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Mosaic Company (MOS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Stage 3: Information for Further Research

MOS Charts October 2015

Net Current Asset Value (NCAV) -$6.99
Graham Number $44.59
PEmg 9.54
Current Ratio 2.71
PB Ratio 1.23
Dividend Yield 2.98%
Number of Consecutive Years of Dividend Growth 1

 

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Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Total Current Assets $5,100,100,000
Total Current Liabilities $1,883,000,000
Long-Term Debt $3,761,800,000
Total Assets $17,776,900,000
Intangible Assets $1,709,600,000
Total Liabilities $7,640,100,000
Shares Outstanding (Diluted Average) 363,300,000

Earnings Per Share History

Next Fiscal Year Estimate $3.11
Dec14 $2.68
May13 $4.42
May12 $4.42
May11 $5.62
May10 $1.85
May09 $5.27
May08 $4.67
May07 $0.95
May06 -$0.35
May05 $0.46
Dec03 -$1.22
Dec02 -$0.97
Dec01 -$0.57
Dec00 -$3.00
Dec99 -$6.75
Dec98 -$0.08
Jun97 $2.03
Jun96 $1.56

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $3.60
Dec14 $3.83
May13 $4.37
May12 $4.36
May11 $4.11
May10 $3.06
May09 $3.18
May08 $1.72
May07 $0.09
May06 -$0.41
May05 -$0.64
Dec03 -$1.63
Dec02 -$1.98
Dec01 -$2.22
Dec00 -$2.44
Dec99 -$1.66
Dec98 $0.83

Recommended Reading:

Other ModernGraham posts about the company

Mosaic Company Analysis – July 2015 Update $MOS
Mosaic Inc. Quarterly Valuation – April 2015 $MOS
34 Companies in the Spotlight This Week – 2/7/15
Mosaic Company Quarterly Valuation – January 2015 $MOS
34 Companies in the Spotlight This Week – 2/7/15

Other ModernGraham posts about related companies

CF Industries Holdings Inc. Analysis – September 2015 Update $CF
Monsanto Company Analysis – September 2015 Update $MON
Mosaic Company Analysis – July 2015 Update $MOS
CF Industries Holdings Analysis – June 2015 Update $CF
Mosaic Inc. Quarterly Valuation – April 2015 $MOS
CF Industries Holdings Inc. Quarterly Valuation – March 2015 $CF
Mosaic Company Quarterly Valuation – January 2015 $MOS
CF Industries Holdings Inc. Quarterly Valuation – December 2014 $CF
Mosaic Company Quarterly Stock Valuation – October 2014 $MOS
CF Industries Holding Company Quarterly Stock Valuation – September 2014 $CF

Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Mosaic Company Analysis – July 2015 Update $MOS

220px-The_Mosaic_Company_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – July 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Mosaic Company (MOS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Mosaic Company is a producer and marketer of concentrated phosphate and potash crop nutrients. The Company is a single source supplier of phosphate and potash-based crop nutrients and animal feed ingredients. It operates in two segments. The Phosphates segment owns and operates mines and production facilities in Florida, which produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and processing plants in Louisiana, which produce concentrated phosphate crop nutrients. The Potash segment owns and operates potash mines and production facilities in Canada and the United States, which produce potash-based crop nutrients, animal feed ingredients and industrial products. It mines phosphate rock in Florida and process rock into finished phosphate products at facilities in Florida and Louisiana. It also mines potash in Saskatchewan and New Mexico. The Company has other production, blending or distribution operations in Brazil, China, India and Paraguay.

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Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 4/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – FAIL

Valuation Summary

Key Data:

Recent Price $44.90
MG Value $26.39
MG Opinion Overvalued
Value Based on 3% Growth $48.95
Value Based on 0% Growth $28.70
Market Implied Growth Rate 2.40%
Net Current Asset Value (NCAV) -$5.95
PEmg 13.30
Current Ratio 3.24
PB Ratio 1.62

Balance Sheet – March 2015

Current Assets $5,252,000,000
Current Liabilities $1,621,000,000
Total Debt $3,775,000,000
Total Assets $17,632,000,000
Intangible Assets $1,687,000,000
Total Liabilities $7,440,000,000
Outstanding Shares 367,900,000

Earnings Per Share

2015 (estimate) $2.90
2014 $2.68
2013 $4.08
2012 $4.42
2011 $4.34
2010 $1.93
2009 $4.28
2008 $4.38
2007 $0.80
2006 $0.18
2005 $0.47

Earnings Per Share – ModernGraham

2015 (estimate) $3.38
2014 $3.57
2013 $3.95
2012 $3.88
2011 $3.45
2010 $2.78

Dividend History

Free Cash Flow

Conclusion:

Mosaic Company qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor is only concerned with the short dividend history.  The Enterprising Investor is only concerned with the lack of earnings growth over the last five years.  As a result, all value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel comfortable proceeding with the evaluation.  As for a valuation, the company appears to be overvalued after seeing its EPSmg (normalized earnings) decline from $3.45 in 2011 to an estimated $3.38 for 2015.  This level of demonstrated earnings growth does not support the market’s implied estimate of 2.4% annual earnings growth over the next 7-10 years.  As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value below the price.

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Mosaic Company (MOS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

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Mosaic Inc. Quarterly Valuation – April 2015 $MOS

220px-The_Mosaic_Company_logo.svgMosaic Company (NYSE:MOS) may present an intriguing investment possibility for value investors, as the company has significantly trailed the market in recent years. Benjamin Graham, the father of value investing, taught that looking at the price cannot be the sole factor in investment decisions, as the most important aspect to consider is whether the company is trading at a discount relative to its intrinsic value. It is through a thorough fundamental analysis that the investor is able to make a determination about a potential investment’s merits. Here is a look at how the company fares in the ModernGraham valuation model.

The model is inspired by the teachings of Benjamin Graham, and considers numerous metrics intended to help the investor reduce risk levels. The first part of the analysis is to determine whether the company is suitable for the very conservative Defensive Investor or the less conservative Enterprising Investor, who is willing to spend a greater amount of time conducting further research.

In addition, Graham strongly suggested that investors avoid speculation, in order to remove the subjective elements of emotion. This is best achieved by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another. By using theModernGraham method, one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.

MOS Chart

MOS data by YCharts

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Defensive Investor – Must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – Market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – Current ratio greater than 2 – PASS
  3. Earnings Stability – Positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – Has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – Earnings per share has increased by at least 1/3rd over the last 10 years, using 3-year averages at the beginning and end of the period – PASS
  6. Moderate PEmg (price over normalized earnings) Ratio – PEmg is less than 20 – PASS
  7. Moderate Price-to-Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – Must pass at least 4 of the following 5 tests or be suitable for a Defensive Investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – Current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt-to-Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – Positive earnings per share for at least 5 years – PASS
  4. Dividend Record – Currently pays a dividend – PASS
  5. Earnings Growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $45.00
MG Value $60.96
MG Opinion Undervalued
Value Based on 3% Growth $51.80
Value Based on 0% Growth $30.37
Market Implied Growth Rate 2.05%
Net Current Asset Value (NCAV) -$5.97
PEmg 12.60
Current Ratio 3.35
PB Ratio 1.56

Balance Sheet – December 2014

Current Assets $5,364,000,000
Current Liabilities $1,600,000,000
Total Debt $3,778,000,000
Total Assets $18,283,000,000
Intangible Assets $1,807,000,000
Total Liabilities $7,580,000,000
Outstanding Shares 371,400,000

Earnings Per Share

2014 $2.68
2013 $4.08
2012 $4.42
2011 $4.34
2010 $1.93
2009 $4.28
2008 $4.38
2007 $0.80
2006 $0.18
2005 $0.47

Earnings Per Share – ModernGraham

2014 $3.57
2013 $3.95
2012 $3.88
2011 $3.45
2010 $2.78
2009 $2.81

Dividend History

MOS Dividend Chart

MOS Dividend data by YCharts

Conclusion

Mosaic Company passes the initial requirements of both the Defensive Investor and the Enterprising Investor. The Defensive Investor’s only concern is the short dividend history, while the Enterprising Investor has no initial concerns. As a result, all value investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

When it comes to that valuation, it is critical to consider the company’s earnings history. In this case, the company has grown its EPSmg (normalized earnings) from $2.78 in 2010 to $3.57 for 2014. This is a strong level of demonstrated growth, which is well above the market’s implied estimate for earnings growth of only 2.05% annually over the next 7-10 years. In fact, the historical growth is around 5.71% per year, so the market is expecting a drop in earnings growth. The ModernGraham valuation model reduces the historical growth to a more conservative figure, assuming that some slowdown will occur, but still returns an estimate of intrinsic value falling above the current price, indicating the company is undervalued at the present time.

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Mosaic Company Quarterly Valuation – January 2015 $MOS

220px-The_Mosaic_Company_logo.svgBenjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 5 Most Undervalued Companies for the Defensive Investor – January 2015.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a specific look at how Mosaic Company (MOS) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): The Mosaic Company (Mosaic) is a producer and marketer of combined concentrated phosphate and potash crop nutrients. It is a single source supplier of phosphate-and potash-based crops nutrients and animal feed ingredients. It operates in two segments: Phosphates and Potash. Its Phosphates segment owns and operates mines and production facilities in Florida. Its Potash segment owns and operates potash mines and production facilities in Canada and the United States, which produce potash-based crop nutrients, animal feed ingredients and industrial products. The Company mines phosphate rock in Florida and processes rock into finished phosphate products at facilities in Florida and Louisiana. It mines potash in Saskatchewan, New Mexico and Michigan. In March 2014, the Company announced that it has completed the acquisition of the phosphate business of CF Industries, Inc.

Defensive Investor – must pass at least 6 of the following 7 tests: Score = 6/7

  1. Adequate Size of Enterprise – market capitalization of at least $2 billion – PASS
  2. Sufficiently Strong Financial Condition – current ratio greater than 2 – PASS
  3. Earnings Stability – positive earnings per share for at least 10 straight years – PASS
  4. Dividend Record – has paid a dividend for at least 10 straight years – FAIL
  5. Earnings Growth – earnings per share has increased by at least 1/3 over the last 10 years using 3 year averages at beginning and end of period – PASS
  6. Moderate PEmg ratio – PEmg is less than 20 – PASS
  7. Moderate Price to Assets – PB ratio is less than 2.5 or PB x PEmg is less than 50 – PASS

Enterprising Investor – must pass at least 4 of the following 5 tests or be suitable for a defensive investor: Score = 5/5

  1. Sufficiently Strong Financial Condition, Part 1 – current ratio greater than 1.5 – PASS
  2. Sufficiently Strong Financial Condition, Part 2 – Debt to Net Current Assets ratio less than 1.1 – PASS
  3. Earnings Stability – positive earnings per share for at least 5 years – PASS
  4. Dividend Record – currently pays a dividend – PASS
  5. Earnings growth – EPSmg greater than 5 years ago – PASS

Valuation Summary

Key Data:

Recent Price $48.69
MG Value $53.56
MG Opinion Fairly Valued
Value Based on 3% Growth $49.82
Value Based on 0% Growth $29.21
Market Implied Growth Rate 2.84%
Net Current Asset Value (NCAV) -$4.93
PEmg 14.17
Current Ratio 3.65
PB Ratio 1.67

Balance Sheet – September 2014

Current Assets $5,659,000,000
Current Liabilities $1,550,000,000
Total Debt $3,774,000,000
Total Assets $18,456,000,000
Intangible Assets $1,741,000,000
Total Liabilities $7,511,000,000
Outstanding Shares 375,900,000

Earnings Per Share

2014 (estimate) $2.27
2013 $4.08
2012 $4.42
2011 $4.34
2010 $1.93
2009 $4.28
2008 $4.38
2007 $0.80
2006 $0.18
2005 $0.47

Earnings Per Share – ModernGraham

2014 (estimate) $3.44
2013 $3.95
2012 $3.88
2011 $3.45
2010 $2.78
2009 $2.81

Dividend History

Conclusion:

Mosaic Company qualifies for both the Defensive Investor and the Enterprising Investor.  The Defensive Investor’s only concern is the short dividend history while the Enterprising Investor has no initial issues as the company passes all of the investor type’s requirements.  As a result, value investors following the ModernGraham approach based on Benjamin Graham’s methods should feel very comfortable proceeding with further research and comparing the company to other opportunities.  From a valuation side of things, the company appears to be fairly valued after growing its EPSmg (normalized earnings) from $2.78 in 2010 to an estimated $3.44 for 2014.  This level of demonstrated growth supports the market’s implied estimate of 2.84% earnings growth and leads the ModernGraham valuation model, based on Benjamin Graham’s formula, to return an estimate of intrinsic value within a margin of safety relative to the price.

Be sure to check out previous ModernGraham valuations of Mosaic Company (MOS) for greater perspective!

The next part of the analysis is up to individual investors, and requires discussion of the company’s prospects.  What do you think?  What value would you put on Mosaic Company (MOS)?  Where do you see the company going in the future?  Is there a company you like better?  Leave a comment on our Facebook page or mention @ModernGraham on Twitter to discuss.

Disclaimer:  The author did not hold a position in Mosaic Company (MOS) or in any other company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  Logo taken from Wikipedia for the sole purpose of identifying the company; this article is not affiliated with the company in any manner.

Mosaic Company Quarterly Stock Valuation – October 2014 $MOS

220px-The_Mosaic_Company_logo.svg

Mosaic Company is currently fairly valued by the ModernGraham valuation model, and should be on the watch list of all Defensive Investors and Enterprising Investors. The Defensive Investor’s only concern with the company is the short dividend history while the Enterprising Investor has no initial concerns. As a result, Enterprising Investors should feel very comfortable proceeding to the next part of the analysis, which is a determination of the company’s intrinsic value.

The company has grown its EPSmg (normalized earnings) from $2.78 in 2010 to an estimated $3.44 for 2014. This growth is in line with the market’s implied estimate of 1.68%, falling within a margin of safety of the figure. This leads the ModernGraham valuation model to return an estimate of intrinsic value near the market’s current price indicating the company is fairly valued at the present time. Value investors are therefore encouraged to proceed with further research to determine whether Mosaic Company is suitable for their own individual portfolios.

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MOS Chart

MOS data by YCharts

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