Headquartered in Saskatoon, Canada, Nutrien Ltd. (NTR) is the world’s largest provider of crop inputs and services, producing and distributing roughly 25 million tonnes of potash, nitrogen and phosphate products worldwide. The stock has rallied 39.3% over the past six months to close its last trading session at $56.02. It is currently trading 6.3% below its 52-week high of $59.76, which it hit on March 18, 2021.
The company has confirmed that there are currently no regulatory plans to close the Canada-U.S. border to freight shipments by rail or truck between in response to the pandemic. It paid a quarterly dividend of $0.46 on April 15, 2021. It announced in February that the Toronto Stock Exchange (TSX) had approved its request to purchase up to 5% of its outstanding common shares. Furthermore, NTR aims to cut greenhouse gas emissions by at least 30% by 2030 as a step toward focusing more on sustainable farming practices.
Here are the factors that we think could influence NTR’s performance in the coming months:
Impressive Historical Growth
Canada is known for its vast mineral resources. And by leveraging its advantageous geographic location NTR has generated 19.7% returns over the past three years. It has also evolved with changing market demand. As a result, its revenue has increased at a CAGR of 71% over the past three years. And its EPS and EBITDA have increased at CAGRs of 64.8% and 35.8%, respectively, over the same period.
Robust Recent Financials
NTR’s net sales for the fourth quarter, ended December 31, 2020, was $4.05 billion, up 17% year-over-year. Its crop nutrient sales increased 22.2% year-over-year for the quarter, while its crop protection products sales increased 30.4% year-over-year. The company sold 2.65 million tonnes of potash in the fourth quarter, which represents a 40.8% year-over-year increase. It also sold 2.85 million tonnes of nitrogen, up 20.4% year-over-year.
Also, NTR’s net earnings for the quarter were $316 million, compared to a $48 million net loss in the prior-year period. Its free cash flow also increased 42% year-over-year to $196 million.
Favorable Analyst Estimates
Analysts expect NTR’s EPS to come in at $1.90 for the quarter ending June 30, 2021, which represents a 31.2% year-over-year increase. Its revenue is expected to increase 10.6% for the quarter ended March 31, 2021, 14.3% for the quarter ending June 30, 2021 and 11.7% in fiscal 2021.
It has an average broker rating of 1.52. Of the 21 Wall Street analysts that have rated the stock, four rated it a Strong Buy and 12 rated it a Buy. Also, the stock is expected to hit $61.47 in the near term, which indicates a potential upside of 9.7%.
POWR Ratings Show Promise
NTR has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. Among these categories, NTR has an A grade for Sentiment, in sync with favorable analyst sentiment.
The stock has a B grade for Growth, consistent with analysts’ expectations that its revenue and EPS will increase.
In addition to the grades we’ve just highlighted, one can see NTR’s ratings for Value, Momentum, Stability, and Quality as well. Get all the NTR ratings here.
NTR is ranked #6 of 30 stocks in the Agriculture industry.
If you’re looking for other top-rated stocks in the Agriculture industry, with an Overall POWR Rating of A or B, you can access them here.
Rising crop prices signal that a recovery in agriculture is well under way. The FAO Food Price Index, which tracks the monthly changes in the international prices of commonly-traded food commodities, averaged 118.5 points in March, which is 2.1% higher than in February, and its highest level since June 2014. NTR boasts both long-and short-term financial strength and is well-positioned to continue thriving this year and beyond. So, we think it’s wise to buy the stock now.
NTR shares were trading at $55.38 per share on Monday morning, down $0.64 (-1.14%). Year-to-date, NTR has gained 14.99%, versus a 11.78% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More…
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