What is MOS's Intrinsic value?

Mosaic Co (MOS) Intrinsic Value Analysis

Executive Summary

As of June 14, 2025, Mosaic Co's estimated intrinsic value ranges from $14.66 to $55.43 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $55.43 +55.0%
Discounted Cash Flow (5Y) $46.47 +29.9%
Dividend Discount Model (Multi-Stage) $31.05 -13.2%
Dividend Discount Model (Stable) $14.66 -59.0%
Earnings Power Value $54.80 +53.3%

Is Mosaic Co (MOS) undervalued or overvalued?

With the current market price at $35.76, the stock appears to be moderately undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Mosaic Co's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.64 0.72
Cost of equity 6.8% 8.9%
Cost of debt 4.6% 5.1%
Tax rate 26.7% 39.8%
Debt/Equity ratio 0.37 0.37
After-tax WACC 5.9% 7.3%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.6% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $11,123 (FY12-2024) to $13,966 (FY12-2034)
  • Net profit margin expansion from 1% to 8%
  • Capital expenditures maintained at approximately 10% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $46 $19,079M 78.0%
10-Year Growth $55 $21,922M 61.6%
5-Year EBITDA $43 $17,957M 76.6%
10-Year EBITDA $51 $20,536M 59.0%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 73.9%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.9%
  • Long-term growth rate: 1.0%
  • Fair value: $31.05 (-13.2% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 8.9% (Low) to 6.8% (High)
  • Long-term growth rate: 0.5% (Low) to 1.5% (High)
  • Fair value range: $10 to $20
  • Selected fair value: $14.66 (-59.0% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $1,416M
Discount Rate (WACC) 7.3% - 5.9%
Enterprise Value $19,352M - $24,096M
Net Debt $4,338M
Equity Value $15,014M - $19,757M
Outstanding Shares 317M
Fair Value $47 - $62
Selected Fair Value $54.80

Key Financial Metrics

Metric Value
Market Capitalization $11344M
Enterprise Value $15683M
Trailing P/E 30.84
Forward P/E 31.24
Trailing EV/EBITDA 6.90
Current Dividend Yield 239.68%
Dividend Growth Rate (5Y) 37.47%
Debt-to-Equity Ratio 0.37

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $16.63
Discounted Cash Flow (5Y) 25% $11.62
Dividend Discount Model (Multi-Stage) 20% $6.21
Dividend Discount Model (Stable) 15% $2.20
Earnings Power Value 10% $5.48
Weighted Average 100% $42.13

Investment Conclusion

Based on our comprehensive valuation analysis, Mosaic Co's weighted average intrinsic value is $42.13, which is approximately 17.8% above the current market price of $35.76.

Key investment considerations:

  • Strong projected earnings growth (1% to 8% margin)
  • Consistent cash flow generation
  • Historical dividend growth of 37.47%

Given these factors, we believe Mosaic Co is currently moderately undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.