The Mosaic Company MOS benefits from healthy demand for phosphate and potash and actions to improve its cost structure amid headwinds from weaker fertilizer prices.

MOS’ shares are down 26.1% in a year compared with the Zacks Fertilizers industry’s 8.8% decline.

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Let’s find out why MOS stock is worth retaining at the moment.

Mosaic Gains on Healthy Demand & Cost Actions

Mosaic is gaining from the strong demand for phosphate and potash, aided by favorable agricultural conditions. Attractive farm economics is driving demand for fertilizers globally. Farmer economics remain favorable in most global growing regions due to strong crop demand and affordable inputs.

Demand for grains and oilseeds remains high globally. Improved farmer affordability is also likely to continue to drive demand for fertilizers. Improved crop prices have also incentivized fertilizer application by growers. In North America, strong yields, early harvest and growers’ need to replenish soil nutrients have ushered in a favorable environment. Demand in Brazil is also expected to be driven by healthy grower economics and low levels of inventories. Low inventory levels, pent-up purchases and favorable weather conditions are also expected to drive demand in India.

The company is taking actions to reduce costs amid a still-challenging operating environment. Its actions to improve its operating cost structure through transformation plans are expected to boost profitability. MOS remains on track with its cost-reduction plan announced last year, which is expected to drive $150 million in run-rate cost reductions by the end of 2025.

Mosaic also remains committed to carrying out investments with high returns with moderate capital expenditures. It has completed the 800,000-ton MicroEssentials capacity conversions. The Esterhazy Hydrofloat project, which will add 400,000 tons in milling capacity, is expected to be completed by the middle of this year. The construction of a new blending and distribution center in Palmeirante, Brazil is also expected to be completed in the third quarter of 2025.

Weak Fertilizer Prices Ail MOS Stock

Softer fertilizer prices are likely to weigh on MOS’s sales and margins. Prices of phosphate and potash have retreated since the back half of 2022 from their peak levels attained in the first half riding on the impacts of the Russia-Ukraine war and disruptions due to the sanctions in Belarus. Lower selling prices hurt the company’s sales in the third quarter of 2024. Net sales tumbled nearly 21% year over year to $2,810.9 million in the quarter. While prices have recovered somewhat of late, weaker year-over-year selling prices are likely to continue to dent MOS’s top line in the fourth quarter of 2024.

A delay in Canpotex shipments due to Canadian rail and port strikes is also expected to hurt Mosaic’s potash volumes in the fourth quarter. Lost production and shipments associated with the impacts of hurricanes Helene and Milton are also likely to affect phosphate volumes in the December quarter.

The Mosaic Company Price and Consensus

The Mosaic Company price-consensus-chart | The Mosaic Company Quote

MOS’s Zacks Rank & Other Key Picks

MOS currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, ICL Group Ltd ICL and AdvanSix Inc. ASIX. While both CRS and ICL sport a Zacks Rank #1 (Strong Buy), ASIX carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.1%. CRS’ shares have soared 183% in the past year. 

The Zacks Consensus Estimate for ICL Group’s current-year earnings has increased by 2.9% in the past 60 days. ICL beat the consensus estimate in each of the last four quarters with the average surprise being 18.1%. 

AdvanSix beat the consensus estimate in three of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 18.9%, on average. ASIX has expected earnings growth of 174% for 2025.

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