Rising Global Food Demand Will Fuel Sustainable Fertilizer Solutions

Key Takeaways

• Mosaic is positioned for sustained growth and profitability through strong fertilizer demand, tight global supply, and operational improvements driving cost reductions and volume gains.
  
• Expansion into specialty fertilizers and disciplined portfolio management are expected to structurally boost earnings resilience, market share, and long-term cash generation.
  
• Shifts in farming practices, technological advances, global overcapacity, operational risks, and stricter regulations threaten Mosaic’s traditional fertilizer business, margins, and long-term profitability.

Catalysts

Through its subsidiaries, produces and markets concentrated phosphate and potash crop nutrients in the United States, Brazil, China, Canada, Paraguay, Argentina, Japan, Colombia, India, Australia, Peru, Mexico, Honduras, the Dominican Republic, Thailand, Indonesia, and internationally.

• Mosaic is set to benefit from rising global food demand and higher crop prices, which are encouraging farmers to maximize yields; this is fueling strong and resilient demand for both phosphate and potash fertilizers and points to a sustained upward trajectory in both sales volumes and pricing, supporting long-term revenue growth.
  
• The ongoing supply constraints in global phosphate and potash, exacerbated by export restrictions from China, production challenges in Laos, and planned reductions by major producers, are expected to keep prices and stripping margins elevated for years. This dynamic is likely to drive outsized net margin expansion and enhance Mosaic’s profitability as long as these market tightness issues persist.
  
• Mosaic’s accelerated operational improvements—including restored phosphate production, investments in production efficiency at Esterhazy and Belle Plaine, and the completion of projects like Hydrofloat and expanded blending capacity in Brazil—are positioned to unlock significant volume growth and cost reductions, bolstering both EBITDA and net income and providing operational leverage as market demand increases.
  
• The company’s expansion in high-margin specialty and biological fertilizer segments, such as MicroEssentials and Mosaic Biosciences, is expected to deliver above-market revenue growth and structurally improve earnings resilience thanks to premium pricing and product innovation that meets evolving sustainability demands of customers and regulators.
  
• Mosaic’s strategic portfolio optimization, capital discipline, and renewed focus on growth markets like Brazil, paired with a robust balance sheet and further cost-reduction programs, set the stage for structurally higher returns on capital, greater cash generation, and stronger net margins—factors that are foundational for justifying the most bullish profit and earnings projections for the company.

Mosaic Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Mosaic compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Mosaic's revenue will grow by 8.8% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 1.6% today to 6.7% in 3 years time.
• The bullish analysts expect earnings to reach $958.0 million (and earnings per share of $3.38) by about April 2028, up from $174.9 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 16.5x on those 2028 earnings, down from 50.5x today. This future PE is lower than the current PE for the US Chemicals industry at 17.6x.
• Analysts expect the number of shares outstanding to decline by 1.39% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.72%, as per the Simply Wall St company report.

Mosaic Future Earnings Per Share Growth

Risks

• Accelerating adoption of precision agriculture and alternative farming practices such as regenerative and organic farming could reduce the long-term global demand for conventional phosphate and potash fertilizers, directly pressuring Mosaic’s core business volumes and revenue growth.
  
• Advancements in bio-based and specialty fertilizers, as well as in crop genetics that enhance nutrient use efficiency, threaten sustained demand for Mosaic’s traditional products and may gradually erode its pricing power and net margins.
  
• Persistent global overcapacity in potash and phosphate, especially from low-cost producers in Russia, China, and the Middle East, could maintain structural pricing pressure and compress Mosaic’s operating margins and earnings over time, regardless of short-term supply disruptions.
  
• Mosaic’s high capital intensity, significant ongoing maintenance needs, and continued operational risks (e.g., weather events impacting phosphate production in the U.S., FX volatility in Brazil) could result in rising costs, increased depreciation, and higher interest expenses, constraining net income and free cash flow for reinvestment or shareholder returns.
  
• Increasing environmental regulation and societal pressure concerning emissions and fertilizer runoff could lead to stricter government controls, higher compliance costs, and operational restrictions, which would negatively impact Mosaic’s profitability and potentially limit future revenue growth.

Valuation

• The assumed bullish price target for Mosaic is $41.84, which represents two standard deviations above the consensus price target of $32.94. This valuation is based on what can be assumed as the expectations of Mosaic's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $44.0, and the most bearish reporting a price target of just $27.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $14.3 billion, earnings will come to $958.0 million, and it would be trading on a PE ratio of 16.5x, assuming you use a discount rate of 7.7%.
• Given the current share price of $27.86, the bullish analyst price target of $41.84 is 33.4% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.