Stock Analysis & Valuation The Mosaic Company (02M.DE)

• Previous Close: €38.16
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	19.60	-49
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

The Mosaic Company (02M.DE) is a leading global producer and marketer of concentrated phosphate and potash crop nutrients, serving agricultural markets in North America and internationally. Headquartered in Tampa, Florida, Mosaic operates through three key segments: Phosphates, Potash, and Mosaic Fertilizantes. The company owns and operates mines that produce phosphate-based fertilizers, including diammonium phosphate (DAP) and monoammonium phosphate (MAP), as well as animal feed ingredients under brands like Biofos and Nexfos. Additionally, Mosaic produces potash for agricultural and industrial applications, including de-icing and water softening. The company serves a diverse customer base, including wholesale distributors, retail chains, cooperatives, and farmers. As a critical player in the agricultural inputs sector, Mosaic benefits from global food demand trends, though it faces cyclical commodity price risks. With a market capitalization of approximately €12.7 billion, Mosaic is a key supplier in the basic materials sector, supporting sustainable farming practices worldwide.

Investment Summary

The Mosaic Company presents a mixed investment case. On the positive side, the company benefits from strong global demand for fertilizers driven by population growth and agricultural productivity needs. Its vertically integrated operations provide cost advantages, and its diversified product portfolio (phosphates, potash, and nitrogen) mitigates single-commodity risks. However, Mosaic is highly exposed to volatile fertilizer prices, which can significantly impact profitability, as seen in its modest net income of €174.9 million on €11.1 billion in revenue. The company's beta of 1.456 indicates higher volatility than the broader market. While Mosaic generates solid operating cash flow (€1.3 billion), significant capital expenditures (€1.25 billion) limit free cash flow. The dividend yield is modest, and investors should weigh cyclical risks against long-term agricultural demand growth.

Competitive Analysis

Mosaic holds a strong position in the global fertilizer market, particularly in phosphates and potash, where it benefits from economies of scale and vertical integration. Its competitive advantage stems from its extensive mining assets, efficient production facilities, and established distribution networks. The company's Mosaic Fertilizantes segment enhances its presence in Brazil, a key agricultural growth market. However, Mosaic faces intense competition from other major fertilizer producers, particularly in commoditized products where pricing power is limited. Unlike some competitors, Mosaic does not have significant nitrogen production capacity, which can be a disadvantage when nitrogen prices are favorable. The company's focus on operational efficiency and cost control helps maintain margins, but geopolitical risks (e.g., trade policies, sanctions on competitors) and environmental regulations pose ongoing challenges. Mosaic's ability to innovate in sustainable fertilizers (e.g., low-carbon products) could strengthen its long-term positioning as environmental concerns grow in agriculture.

Major Competitors

• Nutrien Ltd. (NTR): Nutrien is the world's largest potash producer and a major nitrogen and phosphate player, giving it broader diversification than Mosaic. Its retail network provides direct farmer access, a strength Mosaic lacks. However, Nutrien's higher exposure to nitrogen can be a risk when prices decline. The company's scale in potash provides cost advantages, but it faces similar commodity price volatility as Mosaic.
• ICL Group Ltd (ICL): ICL is a diversified fertilizer and specialty chemicals producer with a strong presence in potash and phosphate. Its specialty chemicals business provides stability compared to Mosaic's pure-play focus on agriculture. ICL's bromine and flame retardant operations differentiate it, but its smaller scale in fertilizers limits its cost competitiveness versus Mosaic.
• CF Industries Holdings, Inc. (CF): CF Industries is a leader in nitrogen fertilizers, a segment where Mosaic has limited presence. Its low-cost natural gas-based production in the U.S. provides a competitive edge in nitrogen, but it lacks Mosaic's exposure to phosphates and potash. CF's focus on nitrogen makes it more vulnerable to gas price fluctuations compared to Mosaic's diversified mineral portfolio.
• The Mosaic Company (MOS): Mosaic's primary listing (MOS) competes directly with its XETRA-traded shares (02M.DE). The NYSE-listed shares offer greater liquidity and visibility to U.S. investors, while 02M.DE provides European investors access. Fundamentally, both represent the same underlying business with identical competitive strengths and weaknesses.
• Yara International ASA (YARA.OL): Yara is a global leader in nitrogen fertilizers with a strong European presence and growing footprint in Africa and Latin America. Its premium fertilizer blends and sustainability focus differentiate it from Mosaic's bulk product approach. However, Yara's higher cost structure and exposure to European gas prices make it less competitive in commoditized products compared to Mosaic.