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MOS vs. SQM: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors interested in Fertilizers stocks are likely familiar with Mosaic (MOS) and SQM (SQM). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Mosaic is sporting a Zacks Rank of #2 (Buy), while SQM has a Zacks Rank of #3 (Hold). This means that MOS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

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The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

MOS currently has a forward P/E ratio of 17.50, while SQM has a forward P/E of 48.15. We also note that MOS has a PEG ratio of 2.50. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SQM currently has a PEG ratio of 2.52.

Another notable valuation metric for MOS is its P/B ratio of 1.13. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, SQM has a P/B of 6.41.

These metrics, and several others, help MOS earn a Value grade of B, while SQM has been given a Value grade of D.

MOS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that MOS is likely the superior value option right now.


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The Mosaic Company (MOS) : Free Stock Analysis Report
 
Sociedad Quimica y Minera S.A. (SQM) : Free Stock Analysis Report
 
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