What happened

Last week, prepping for Mosaic Company's (NYSE:MOS) upcoming second-quarter earnings report, investment bank Citigroup urged investors to buy the stock as a deep value candidate poised to enjoy rebounding profit. I disagreed, concluding after running the valuation that "I simply do not agree that Mosaic shares are a buy."

One week later, Mosaic's earnings are out, and Mosaic's stock...well, as of 2:05 p.m. EDT, it was down 11%.

Sun reflected in a flooded cornfield

Image source: Getty Images.

So what

So why is Mosaic down so much? Probably, the company's $0.60-per-share loss (as reported under generally accepted accounting principles, or GAAP) had something to do with it.

Granted, Mosaic blamed a $0.72 charge to earnings "for notable items, primarily the closure of the Plant City facility" for the entirety of the loss; it said it would have earned $0.12 per share if profit was "adjusted" for that charge. But even so, analysts were looking for Mosaic to post a pro forma profit of $0.29 per share, so that explanation doesn't entirely hold water.

What does hold water: the cornfields of the American Midwest, which hold a significant amount of the stuff after an exceedingly rainy spring and early summer. It's this "unprecedented wet weather in the Midwest United States," says Mosaic, that really "negatively impacted its North American spring fertilizer sales volumes and phosphates margins" -- and prompted the closing of the Plant City phosphates facility in the first place.

Now what

Will this situation ever improve? Probably. As Midwesterners know, the one certain thing about the weather is that it's always changing. Mosaic thinks "the potential for record North American fertilizer application volumes and strong demand in Brazil will lead to good demand globally during the second half of the year, as grain prices incent growers to maximize planted acres and apply the necessary nutrients."

A rebound of demand for fertilizer, now that fields are finally dry enough to plant, could enable Mosaic to earn as much as $1.10 to $1.50 per share this year (unfortunately, only pro forma), says management. But with only $0.37 per share of pro forma profit booked year to date, Mosaic still has a long row to hoe before the year is done, and all its promised profit harvested.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.