Shimmysays

Why Is Mosaic Looking to Sell Its Nitrogen Segment?

Nitrogen fertilizer pricing environment tends to be more volatile than potash and phosphates. That said, at this point the prospects for the nitrogen market look good. Just monitor corn, which is the most nitrogen-intensive crop. Floodings in the US and China have been driving corn futures significantly higher over the past few weeks in anticipation of poor corn harvests. Over the long-run, potash and phosphates are a better bet, but it may be easier to sell the nitrogen business when the environment for that market is positive.

In terms of nitrogen fertilizers, Yara Intl (Norway) is the largest global player. It seems that analysts are starting to upgrade earnings numbers for this one. The prospect of robust double-digit earnings growth for both this year and single-digit multiple valuations make it look very attractive in a hot market.

Global P/E Ratios: How the U.S. Stacks Up

The comparisons between trailing and estimated PE ratios imply over-aggressive current year earnings growth expectations for the S&P 500. These are likely to be moderated over time, suggesting that the real valuation is somewhat higher than it appears in the chart.