Mosaic Co (NYSE:MOS) stock might just gather moss
Analysts are saying that from a technical standpoint, Mosaic Co (NYSE:MOS) is experiencing very unfavorable currents on the moving-average crossover front. Very recently, its 50-day moving average broke through the 200-day simple moving-average. This indicated a short-term bearish trend. This is something that had already started taking effect.
Over the past 4 weeks, the stock has moved down by 24.0%. In addition, Zacks has assigned a “strong sell” rating to the stock and by the looks of it, now might just be the right time to ease out of the MOS stock which seems to spell trouble.
Fertilizer price drops
Fertilizer prices are on the decline. This is due to the rise in competition and addition of capacity. Companies such as Mosaic, Potash Corp, CF Industries Holdings and Agrium have either initiated or are planning on initiating a few share buyback program rounds. The boards of the respective companies will have to approve these buybacks in order to enable the managers to buy their own company’s shares in the open-market. Let’s take a look at why companies adopt measures such as these and whether they are a positive for the company or will have an adverse effect on their returns.
The basics of buybacks
One basic reason for companies to launch buyback programs is because they are of the opinion that their company is undervalued. Most investors are aware that the earnings are the driving-factor behind the price of their stock. More often than not, investors use P/E ratios. These ratios measure exactly how much the investors pay for a segment of the company’s earnings. Fact of the matter is that in their raw form, they are not a great multiple.