Terra Nitrogen Company, L.P. (NYSE: TNH) and Mosaic Company (The) (NYSE:MOS) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.

Insider and Institutional Ownership

3.4% of Terra Nitrogen Company, L.P. shares are held by institutional investors. Comparatively, 76.8% of Mosaic Company (The) shares are held by institutional investors. 2.0% of Terra Nitrogen Company, L.P. shares are held by company insiders. Comparatively, 0.4% of Mosaic Company (The) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Terra Nitrogen Company, L.P. and Mosaic Company (The)’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Terra Nitrogen Company, L.P. $398.10 million 3.68 $196.10 million $6.47 12.13
Mosaic Company (The) $7.15 billion 0.96 $1.07 billion $0.42 46.50

Mosaic Company (The) has higher revenue and earnings than Terra Nitrogen Company, L.P.. Terra Nitrogen Company, L.P. is trading at a lower price-to-earnings ratio than Mosaic Company (The), indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Terra Nitrogen Company, L.P. and Mosaic Company (The), as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Terra Nitrogen Company, L.P. 0 0 0 0 N/A
Mosaic Company (The) 4 8 1 0 1.77

Mosaic Company (The) has a consensus target price of $24.00, suggesting a potential upside of 22.89%. Given Mosaic Company (The)’s higher possible upside, analysts clearly believe Mosaic Company (The) is more favorable than Terra Nitrogen Company, L.P..

Risk & Volatility

Terra Nitrogen Company, L.P. has a beta of 0.06, suggesting that its stock price is 94% less volatile than the S&P 500. Comparatively, Mosaic Company (The) has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.

Profitability

This table compares Terra Nitrogen Company, L.P. and Mosaic Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Terra Nitrogen Company, L.P. 38.78% 43.15% 39.71%
Mosaic Company (The) 2.07% 3.31% 1.88%

Dividends

Terra Nitrogen Company, L.P. pays an annual dividend of $6.40 per share and has a dividend yield of 8.2%. Mosaic Company (The) pays an annual dividend of $0.60 per share and has a dividend yield of 3.1%. Terra Nitrogen Company, L.P. pays out 98.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mosaic Company (The) pays out 142.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Terra Nitrogen Company, L.P. has increased its dividend for 2 consecutive years. Terra Nitrogen Company, L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Terra Nitrogen Company, L.P. beats Mosaic Company (The) on 9 of the 16 factors compared between the two stocks.

Terra Nitrogen Company, L.P. Company Profile

Terra Nitrogen Company, L.P. (TNCLP) is a limited partnership that produces nitrogen fertilizer products. The Company’s principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solutions (UAN), which it manufactures at its facility in Verdigris, Oklahoma. Its nitrogen products are used primarily by farmers. For the year ended December 31, 2016, it had sold 2.2 million tons of nitrogen fertilizers. The Company has production facility, in Verdigris, Oklahoma. As of December 31, 2016, it had two ammonia plants, two nitric acid plants and two UAN plants. The Company conducts its operations through an operating partnership, Terra Nitrogen, Limited Partnership (TNLP). Terra Nitrogen GP Inc. is the general partner of both TNCLP and TNLP and owns a 0.025% general partner interest in each of TNCLP and TNLP. The General Partner is an indirect subsidiary of CF Industries Holdings, Inc., which is engaged in the manufacturing and distribution of nitrogen products.

Mosaic Company (The) Company Profile

The Mosaic Company is a producer and marketer of concentrated phosphate and potash crop nutrients. The Company operates through three segments: Phosphates, Potash and International Distribution. The Company is a supplier of phosphate- and potash-based crop nutrients and animal feed ingredients. The Phosphates segment owns and operates mines and production facilities in Florida, which produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and processing plants in Louisiana, which produce concentrated phosphate crop nutrients. The Potash segment mines and processes potash in Canada and the United States, and sells potash in North America and internationally. The International Distribution segment markets phosphate-, potash- and nitrogen-based crop nutrients and animal feed ingredients, and provides other ancillary services to wholesalers, cooperatives, independent retailers and farmers in South America and the Asia-Pacific regions.

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