Stock Analysis on Net
Stock Analysis on Net

Mosaic Co. (NYSE:MOS)

This company has been moved to the archive! The financial data has not been updated since August 2, 2022.

Present Value of Free Cash Flow to Equity (FCFE)

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In discounted cash flow (DCF) valuation techniques the value of the stock is estimated based upon present value of some measure of cash flow. Free cash flow to equity (FCFE) is generally described as cash flows available to the equity holder after payments to debt holders and after allowing for expenditures to maintain the company asset base.

Intrinsic Stock Value (Valuation Summary)

Mosaic Co., free cash flow to equity (FCFE) forecast

US$ in thousands, except per share data

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Year Value FCFEt or Terminal value (TVt) Calculation Present value at 20.36%
01 FCFE0 687,100
1 FCFE1 701,647 = 687,100 × (1 + 2.12%) 582,956
2 FCFE2 740,752 = 701,647 × (1 + 5.57%) 511,336
3 FCFE3 807,638 = 740,752 × (1 + 9.03%) 463,199
4 FCFE4 908,477 = 807,638 × (1 + 12.49%) 432,894
5 FCFE5 1,053,306 = 908,477 × (1 + 15.94%) 417,002
5 Terminal value (TV5) 27,639,277 = 1,053,306 × (1 + 15.94%) ÷ (20.36% – 15.94%) 10,942,347
Intrinsic value of Mosaic Co. common stock 13,349,733
 
Intrinsic value of Mosaic Co. common stock (per share) $38.66
Current share price $52.22

Based on: 10-K (reporting date: 2021-12-31).

1 See details »

Disclaimer!
Valuation is based on standard assumptions. There may exist specific factors relevant to stock value and omitted here. In such a case, the real stock value may differ significantly form the estimated. If you want to use the estimated intrinsic stock value in investment decision making process, do so at your own risk.

Required Rate of Return (r)

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Assumptions
Rate of return on LT Treasury Composite1 RF 4.81%
Expected rate of return on market portfolio2 E(RM) 13.55%
Systematic risk of Mosaic Co. common stock βMOS 1.78
 
Required rate of return on Mosaic Co. common stock3 rMOS 20.36%

1 Unweighted average of bid yields on all outstanding fixed-coupon U.S. Treasury bonds neither due or callable in less than 10 years (risk-free rate of return proxy).

2 See details »

3 rMOS = RF + βMOS [E(RM) – RF]
= 4.81% + 1.78 [13.55% – 4.81%]
= 20.36%

FCFE Growth Rate (g)

FCFE growth rate (g) implied by PRAT model

Mosaic Co., PRAT model

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Average Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Selected Financial Data (US$ in thousands)
Dividends 127,400 76,600 76,400 39,100 125,100
Net earnings (loss) attributable to Mosaic 1,630,600 666,100 (1,067,400) 470,000 (107,200)
Net sales 12,357,400 8,681,700 8,906,300 9,587,300 7,409,400
Total assets 22,036,400 19,789,800 19,298,500 20,119,200 18,633,400
Total Mosaic stockholders’ equity 10,604,100 9,581,400 9,185,500 10,397,300 9,617,500
Financial Ratios
Retention rate1 0.92 0.89 — 0.92 —
Profit margin2 13.20% 7.67% -11.98% 4.90% -1.45%
Asset turnover3 0.56 0.44 0.46 0.48 0.40
Financial leverage4 2.08 2.07 2.10 1.94 1.94
Averages
Retention rate 0.91
Profit margin 2.47%
Asset turnover 0.47
Financial leverage 2.02
 
FCFE growth rate (g)5 2.12%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Retention rate = (Net earnings (loss) attributable to Mosaic – Dividends) ÷ Net earnings (loss) attributable to Mosaic
= (1,630,600 – 127,400) ÷ 1,630,600
= 0.92

2 Profit margin = 100 × Net earnings (loss) attributable to Mosaic ÷ Net sales
= 100 × 1,630,600 ÷ 12,357,400
= 13.20%

3 Asset turnover = Net sales ÷ Total assets
= 12,357,400 ÷ 22,036,400
= 0.56

4 Financial leverage = Total assets ÷ Total Mosaic stockholders’ equity
= 22,036,400 ÷ 10,604,100
= 2.08

5 g = Retention rate × Profit margin × Asset turnover × Financial leverage
= 0.91 × 2.47% × 0.47 × 2.02
= 2.12%

FCFE growth rate (g) implied by single-stage model

g = 100 × (Equity market value0 × r – FCFE0) ÷ (Equity market value0 + FCFE0)
= 100 × (18,029,853 × 20.36% – 687,100) ÷ (18,029,853 + 687,100)
= 15.94%

where:
Equity market value0 = current market value of Mosaic Co. common stock (US$ in thousands)
FCFE0 = the last year Mosaic Co. free cash flow to equity (US$ in thousands)
r = required rate of return on Mosaic Co. common stock

FCFE growth rate (g) forecast

Mosaic Co., H-model

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Year Value gt
1 g1 2.12%
2 g2 5.57%
3 g3 9.03%
4 g4 12.49%
5 and thereafter g5 15.94%

where:
g1 is implied by PRAT model
g5 is implied by single-stage model
g2, g3 and g4 are calculated using linear interpoltion between g1 and g5

Calculations

g2 = g1 + (g5 – g1) × (2 – 1) ÷ (5 – 1)
= 2.12% + (15.94% – 2.12%) × (2 – 1) ÷ (5 – 1)
= 5.57%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= 2.12% + (15.94% – 2.12%) × (3 – 1) ÷ (5 – 1)
= 9.03%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= 2.12% + (15.94% – 2.12%) × (4 – 1) ÷ (5 – 1)
= 12.49%