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 the Firm (FCFF)

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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 the firm (FCFF) is generally described as cash flows after direct costs and before any payments to capital suppliers.

Intrinsic Stock Value (Valuation Summary)

Mosaic Co., free cash flow to the firm (FCFF) forecast

US$ in thousands, except per share data

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Year Value FCFFt or Terminal value (TVt) Calculation Present value at 16.43%
01 FCFF0 1,059,220
1 FCFF1 628,115 = 1,059,220 × (1 + -40.70%) 539,486
2 FCFF2 454,324 = 628,115 × (1 + -27.67%) 335,156
3 FCFF3 387,823 = 454,324 × (1 + -14.64%) 245,729
4 FCFF4 381,596 = 387,823 × (1 + -1.61%) 207,667
5 FCFF5 425,196 = 381,596 × (1 + 11.43%) 198,744
5 Terminal value (TV5) 9,470,572 = 425,196 × (1 + 11.43%) ÷ (16.43% – 11.43%) 4,426,715
Intrinsic value of Mosaic Co. capital 5,953,498
Less: Total debt (fair value) 5,562,600
Intrinsic value of Mosaic Co. common stock 390,898
 
Intrinsic value of Mosaic Co. common stock (per share) $1.13
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.

Weighted Average Cost of Capital (WACC)

Mosaic Co., cost of capital

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Value1 Weight Required rate of return2 Calculation
Equity (fair value) 18,029,853 0.76 20.29%
Total debt (fair value) 5,562,600 0.24 3.91% = 5.08% × (1 – 22.96%)

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

1 US$ in thousands

   Equity (fair value) = No. shares of common stock outstanding × Current share price
= 345,267,189 × $52.22
= $18,029,852,609.58

   Total debt (fair value). See details »

2 Required rate of return on equity is estimated by using CAPM. See details »

   Required rate of return on debt. See details »

   Required rate of return on debt is after tax.

   Estimated (average) effective income tax rate
= (26.90% + 21.00% + 17.90% + 14.00% + 35.00%) ÷ 5
= 22.96%

WACC = 16.43%

FCFF Growth Rate (g)

FCFF 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)
Interest expense 194,300 214,100 216,000 215,800 171,300
Net earnings (loss) attributable to Mosaic 1,630,600 666,100 (1,067,400) 470,000 (107,200)
 
Effective income tax rate (EITR)1 26.90% 21.00% 17.90% 14.00% 35.00%
 
Interest expense, after tax2 142,033 169,139 177,336 185,588 111,345
Add: Dividends 127,400 76,600 76,400 39,100 125,100
Interest expense (after tax) and dividends 269,433 245,739 253,736 224,688 236,445
 
EBIT(1 – EITR)3 1,772,633 835,239 (890,064) 655,588 4,145
 
Short-term debt 302,800 100 41,600 11,500 6,100
Current maturities of long-term debt 596,600 504,200 47,200 26,000 343,500
Structured accounts payable arrangements 743,700 640,000 740,600 572,800 386,200
Long-term debt, less current maturities 3,382,200 4,073,800 4,525,500 4,491,500 4,878,100
Total Mosaic stockholders’ equity 10,604,100 9,581,400 9,185,500 10,397,300 9,617,500
Total capital 15,629,400 14,799,500 14,540,400 15,499,100 15,231,400
Financial Ratios
Retention rate (RR)4 0.85 0.71 — 0.66 -56.04
Return on invested capital (ROIC)5 11.34% 5.64% -6.12% 4.23% 0.03%
Averages
RR -13.46
ROIC 3.02%
 
FCFF growth rate (g)6 -40.70%

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).

1 See details »

2021 Calculations

2 Interest expense, after tax = Interest expense × (1 – EITR)
= 194,300 × (1 – 26.90%)
= 142,033

3 EBIT(1 – EITR) = Net earnings (loss) attributable to Mosaic + Interest expense, after tax
= 1,630,600 + 142,033
= 1,772,633

4 RR = [EBIT(1 – EITR) – Interest expense (after tax) and dividends] ÷ EBIT(1 – EITR)
= [1,772,633 – 269,433] ÷ 1,772,633
= 0.85

5 ROIC = 100 × EBIT(1 – EITR) ÷ Total capital
= 100 × 1,772,633 ÷ 15,629,400
= 11.34%

6 g = RR × ROIC
= -13.46 × 3.02%
= -40.70%

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

g = 100 × (Total capital, fair value0 × WACC – FCFF0) ÷ (Total capital, fair value0 + FCFF0)
= 100 × (23,592,453 × 16.43% – 1,059,220) ÷ (23,592,453 + 1,059,220)
= 11.43%

where:

Total capital, fair value0 = current fair value of Mosaic Co. debt and equity (US$ in thousands)
FCFF0 = the last year Mosaic Co. free cash flow to the firm (US$ in thousands)
WACC = weighted average cost of Mosaic Co. capital

FCFF growth rate (g) forecast

Mosaic Co., H-model

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Year Value gt
1 g1 -40.70%
2 g2 -27.67%
3 g3 -14.64%
4 g4 -1.61%
5 and thereafter g5 11.43%

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)
= -40.70% + (11.43% – -40.70%) × (2 – 1) ÷ (5 – 1)
= -27.67%

g3 = g1 + (g5 – g1) × (3 – 1) ÷ (5 – 1)
= -40.70% + (11.43% – -40.70%) × (3 – 1) ÷ (5 – 1)
= -14.64%

g4 = g1 + (g5 – g1) × (4 – 1) ÷ (5 – 1)
= -40.70% + (11.43% – -40.70%) × (4 – 1) ÷ (5 – 1)
= -1.61%