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MOS or SMG: Which Is the Better Value Stock Right Now?


Investors with an interest in Fertilizers stocks have likely encountered both Mosaic (MOS) and Scotts Miracle-Gro (SMG). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Right now, Mosaic is sporting a Zacks Rank of #1 (Strong Buy), while Scotts Miracle-Gro has a Zacks Rank of #2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MOS has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company’s fair value.

MOS currently has a forward P/E ratio of 13.01, while SMG has a forward P/E of 18.05. We also note that MOS has a PEG ratio of 1.86. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. SMG currently has a PEG ratio of 1.87.

Another notable valuation metric for MOS is its P/B ratio of 1.12. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. For comparison, SMG has a P/B of 16.54.

Based on these metrics and many more, MOS holds a Value grade of B, while SMG has a Value grade of D.

MOS sticks out from SMG in both our Zacks Rank and Style Scores models, so value investors will likely feel that MOS is the better option right now.

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