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Mosaic to Buyback Shares, Idle Louisiana Phosphate Operation

Zacks Equity Research

The Mosaic Company MOS has announced several strategic actions prior to its upcoming investor meetings.

The company intends to initiate $250 million in stock repurchases under its current share repurchase authorization. Notably, it has $850 million available under its remaining capacity. The company believes that the repurchases indicate efficient use of its capital in current environment. The company will continue to evaluate the amount repurchased on the basis of expected cash flow.

Mosaic is also set to idle its Louisiana phosphates operations effective Oct 1, 2019. The move is aimed to reduce production by roughly 500,000 tons in 2019.

The company noted that prices of phosphates declined further through the summer and surplus imports continued to flood the U.S. market over high-channel inventories. Mosaic believes that idling production will tighten supply and rebalance the market. It will prioritize shipments to address key customer needs during the idling period.

Moreover, the company expects to accelerate reduction of high phosphate fertilizer inventories. It continues to expect strong fall fertilizer application in North America as well as balance in global demand and supply by 2020.

The company’s Brazil-based business, Mosaic Fertilizantes, also executed initiatives that are pertinent to exceed or meet earlier announced synergy target of $275 million in 2019. Additionally, Mosaic Fertilizantes plans to generate an additional $200 million in annual value through ongoing business transformation by the end of 2022.

Mosaic believes that these initiatives are likely to boost its ability to gain from an expected strong business condition in 2020.

Shares of Mosaic have lost 34.8% in the past year compared with the industry’s 15.8% decline.

Zacks Rank & Key Picks

Mosaic currently carries a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Alamos Gold Inc. AGI and Arconic Inc. ARNC, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 160% for 2019. The company’s shares have surged 79.5% in the past year.

Alamos Gold has projected earnings growth rate of 320% for the current year. The company’s shares have rallied 60.5% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have moved up 18.6% in the past year.

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