DCF Studio

    MOS · NYQ · Basic Materials

    The Mosaic Company

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 9.98

    Market price

    USD 24.48

    Implied upside

    -59.2%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    AdjustedCapital expenditure runs at 9.8% of revenue against depreciation of 7.5%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 9.98-59.2%
    Exit multiple
    USD 8.19-66.5%
    Market price
    USD 24.48

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m440m881mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 10.3bnUSD 8.9bnUSD 7.6bnUSD 6.5bnUSD 5.6bn-14.3%
    EBITUSD 1.3bnUSD 1.1bnUSD 928.8mUSD 796.3mUSD 682.7m-14.3%
    NOPATUSD 998.3mUSD 855.9mUSD 733.8mUSD 629.1mUSD 539.4m-14.3%
    Add depreciation & amortisationUSD 770.5mUSD 660.6mUSD 566.4mUSD 485.6mUSD 416.3m-14.3%
    Less capital expenditureUSD -1.0bnUSD -870.3mUSD -746.1mUSD -639.7mUSD -548.4m-14.3%
    Less increase in working capitalUSD 127.2mUSD 109.1mUSD 93.5mUSD 80.2mUSD 68.7m+14.3%
    Free cashflow to firmUSD 880.9mUSD 755.3mUSD 647.5mUSD 555.1mUSD 476.0m-14.3%
    Discount factor0.96460.89750.83500.77690.7228-
    Present valueUSD 849.7mUSD 677.8mUSD 540.7mUSD 431.3mUSD 344.0m-20.2%
    Present Value Of The ForecastUSD 2.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.887Reported 0.831, pulled toward 1.0 (Blume)
    Cost of equity9.88%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 7.8bn59.6% of capital
    Total debtUSD 5.3bn40.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.48%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 9.98

    65% of EV

    Forecast FCFF, final year
    USD 476.0m
    Capex at depreciation, working capital in reinvestment
    USD 539.4m
    Less reinvestment at g/ROIC (33.4% of NOPAT)
    USD -180.3m
    Capitalised
    USD 359.1m
    ROIC (WACC floor)
    7.5%
    Terminal value, undiscounted
    USD 7.4bn
    Terminal value, discounted
    USD 5.3bn
    Enterprise value
    USD 8.2bn
    Less net debt
    USD 5.0bn
    Equity value
    USD 3.2bn

    Exit at 6.0x EBITDA

    Value per shareUSD 8.19

    63% of EV

    Terminal value, undiscounted
    USD 6.6bn
    Terminal value, discounted
    USD 4.8bn
    Enterprise value
    USD 7.6bn
    Less net debt
    USD 5.0bn
    Equity value
    USD 2.6bn

    Spread between methods: 20%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.48%18.4918.7519.0619.4519.97
    6.48%13.3813.4713.5713.6713.77
    7.48%9.829.909.9810.0610.15
    8.48%7.107.177.247.307.37
    9.48%4.955.015.075.125.18

    Outlined: this model. Green text: above today's price of 24.48. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year-14.3%-4.0%+10.2pp
    EBIT margin12.2%18.8%+6.6pp
    Discount rate7.5%5.0%-2.5pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.