MOSAIC CO (MOS) stock intrinsic value fair value estimate & owner earnings analysis

WHAT THE BUSINESS IS Mosaic mines and processes two of the three main crop nutrients. Potash comes from mines in Saskatchewan, Canada: Esterhazy, Belle Plaine and Colonsay, with 8.8 million tonnes produced in 2025. Phosphate rock comes from three Florida mines (Four Corners, South Fort Meade and Wingate) and is processed into DAP, MAP and MicroEssentials at Florida and Louisiana plants. Mosaic Fertilizantes in Brazil mines phosphate and runs one of that country's largest fertilizer distribution businesses, selling about 9 million tonnes a year. Selling prices are set by global commodity markets. Sulfur and ammonia, the main phosphate inputs, are also commodities. Earnings therefore swing hard with the fertilizer cycle, and cost control and plant reliability decide how much of each swing Mosaic keeps. HOW WE MEASURED EARNING POWER We start from cash generated by operations. We take out the timing effects of inventories, receivables and payables, and subtract share-based pay and all capital spending. We treat every dollar of capital spending as the cost of staying in business. Revenue moves with fertilizer prices, not volumes: phosphate finished-product sales actually fell from 7.0 million tonnes in 2023 to 5.9 million in 2025, and potash volumes have been flat. So none of the spending is growth investment. We leave mine-closure and land-reclamation cash spending inside the figures as a real cost; it was $289 million in 2025. Non-cash items drop out: currency swings on Brazilian balances, the $317 million paper gain on Mosaic's Saudi shares in 2025, and impairments on the Carlsbad and Taquari mine sales. On that basis, per share, owner earnings were: 2018 $1.64, 2019 -$0.41, 2020 -$0.11, 2021 $4.31, 2022 $10.26, 2023 $2.04, 2024 $0.67 and 2025 $1.48. We start in 2018, when Mosaic bought Vale Fertilizantes and took its current shape. Those eight years cover a full cycle: the 2019-2020 trough, the 2022 price spike after Russia invaded Ukraine, and the fall back since. The median, $1.56 a share or roughly $500 million a year, is our measure of normal earning power. The average is higher ($2.46) only because of the one-off 2022 spike. RECENT RESULTS The first half of 2026 was poor. Sales were slightly higher, but the company lost $530 million, including a $239 million write-down on assets being sold. Cash from operations minus capital spending, before working-capital swings, came to about -$217 million. The same measure was +$55 million in the first half of 2025. The 2025 filing already showed the pressure. Phosphate gross margin fell from $702 million in 2023 to $437 million in 2025. Sulfur costs rose 80%, to $237 a long ton. Phosphate plants ran at only 63% of capacity. In late 2025 the Fospar and Araxa plants in Brazil were idled because of sulfur costs. Owner earnings grew 121% in 2025, but we do not carry that forward. Our base case assumes about $0.40 a share for 2026 and $1.10 for 2027, back to normal only from 2028. THE CASES (6% discount rate) Base, $23.52 a share. Earnings return to the $1.56 cycle median from 2028 to 2035. Potash is the steady part: Esterhazy's K3 mine has reserves to 2049 and Belle Plaine to 2084. Florida phosphate is the weak point. Proven and probable rock reserves are 96 million tonnes, about ten years at the 2025 mining rate of 9.5 million tonnes. Mosaic has a long record of adding reserves, including buying the South Fort Meade Eastern Reserves in 2020 and 2022, and it plans to develop the DeSoto, Pioneer and South Pasture properties. None of those are counted as reserves today, so the base case trims earnings to $1.30 a share from 2036 to 2049. After 2049 only the long-life potash and the Brazilian distribution business remain, at about $0.50 a share. Operating earnings are worth about $18.52. We add about $5.00 for Mosaic's 111 million shares of Saudi Arabian Mining Company (Ma'aden). They were worth about $1.85 billion at the end of 2025, but sale restrictions lift gradually over five years, so we discount them for the wait. Bear, $13.17 a share. Phosphate stays stuck: sulfur and ammonia stay at 2025 costs, plants keep running in the low-60s percent, and closure and water-treatment costs keep rising. Mosaic raised its estimated future closure costs by $541 million in 2024 and $190 million in 2025, and water treatment added $70 million of cost in 2025. Earnings are zero in 2026, $0.40 in 2027, then average $0.80 a share through the next cycle. Florida mining largely ends after about 2035 because no new reserves are permitted, leaving mostly potash at $0.55 a share through 2049 and $0.15 after that. Debt makes this case worse. Long-term debt rose from $3.3 billion at the end of 2024 to $4.8 billion by June 2026, with about $0.8 billion of short-term borrowings on top. At bear-case earnings, Mosaic has little room to pay that down. Operating value is about $8.17, plus the Ma'aden shares. Bull, $37.00 a share. Mosaic's own levers work. Phosphate returns to the output it achieved in 2023, when it produced 6.6 million tonnes against 6.3 million in 2025. Sulfur falls back toward the $132 a long ton paid in 2024; the 2025 increase cost about $285 million together with higher ammonia. Potash keeps the price and volume gains it made in 2025, when its gross margin rose to $870 million from $643 million. In this case earnings average $2.50 a share, about the full-cycle average, and new Florida reserves are permitted so that level holds through 2049. WHAT COULD MAKE THIS WRONG The estimate depends most on phosphate's cost position and on Florida reserves being replaced. If sulfur stays high and DeSoto or other properties are not permitted, the bear case is the realistic one. On the other side, a return to 2021-2022 prices would push results well above the bull case for a few years. Nothing in the filings lets us predict that, so no case assumes it. The per-share figures include the roughly 25% share of the Miski Mayo mine in Peru owned by partners, worth about $0.10 a share a year. That is small, and we did not remove it. PRICE DISCIPLINE This is a cyclical commodity producer, now in a weak patch and with rising debt, so the estimate calls for a wide margin of safety. The margin-of-safety price is about $12 a share. That price applies only once cash generation clearly covers capital spending again and debt stops climbing.