We expect fertilizer maker
) to beat earnings expectations when it reports first-quarter
2014 results before the opening gong on May 6. Last quarter, it
racked up a roughly 18% negative surprise.
Why a Likely Positive Surprise?
Our proven model shows that Mosaic has the right combination
of two key ingredients to beat earnings.
Positive Zacks ESP:
(Expected Surprise Prediction) for Mosaic is +3.45% - the
difference between the Most Accurate estimate of 60 cents and the
Zacks Consensus Estimate of 58 cents. This indicates a likely
positive earnings surprise.
Zacks Rank #3 (Hold):
Mosaic's Zacks Rank #3 increases the predictive power of its ESP.
The combination of its Zacks Rank and Earnings ESP makes us
confident of a positive earnings surprise in the first
Note that stocks with Zacks Ranks of #1, 2 and 3 have a
significantly higher chance of beating earnings. The Sell rated
stocks (#4 and 5) should never be considered going into an
Expected Earnings Drivers
Mosaic is well placed to leverage the rising global demand for
grain and oilseeds. The company should gain from its efforts to
boost production capacity and cut costs as well as strategic
acquisitions including the recently announced takeover of
) fertilizer distribution business.
Mosaic's larger Phosphate segment is expected to benefit from
lower raw materials costs and higher selling prices in the first
quarter, lending support to the division's margins. Moreover, its
Potash unit is expected to see lower sulfur and ammonia costs in
the quarter, contributing to the anticipated rise in gross
margin. Sales volume for the potash business is also expected to
increase year over year in the first quarter.
Other Stocks to Consider
Mosaic is not the only firm looking up this earnings season.
We also see likely earnings beats coming from these companies in
the basic materials sector.
Kronos Worldwide, Inc.
) has an earnings ESP of +30.77% and carries a Zacks Rank #2
CF Industries Holdings, Inc.
) has an earnings ESP of +5.63% and sports a Zacks Rank #3
ARCHER DANIELS (ADM): Free Stock Analysis
CF INDUS HLDGS (CF): Free Stock Analysis
KRONOS WORLDWD (KRO): Free Stock Analysis
MOSAIC CO/THE (MOS): Free Stock Analysis
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