Recently, agricultural fertilizer companies (XLB) have been experiencing a surge in their valuation multiples. However, these valuation multiples have been receding as a result of contracting margins due to lower price realizations. In this article, we’ll compare Mosaic’s (MOS) valuation multiple with those of its peers.
In the above chart, you can see Mosaic’s forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) next to its peers’ medians.
Mosaic’s forward EV-to-EBITDA ratio as of April 21 was ~10.1x, which was down from the company’s recent peak of ~13.8x in January 2017. While the company’s valuation has fallen recently, it remains higher than its levels in 2015 and early 2016.
As of April 21, the peer median valuation multiple stood at 10.56x. This median includes Potash Corporation of Saskatchewan (POT), which was trading at a multiple of 12.4x, Agrium (AGU), which was trading at a multiple of 9.2x, and CF Industries (CF), which was trading at a multiple of 10.9x.
Valuation multiples for Mosaic’s peers (MOO) have also risen, however, compared to 2015 and early 2016. This earnings season will give us more detail about how the industry trends have shifted to warrant higher valuations.
Next, we’ll discuss analysts’ recommendations and price targets.