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Bull of the Day: Nutrien (NTR)

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Nutrien Ltd. (NTR - Free Report) recently raised full year earnings guidance as the agriculture market remains strong. This Zacks Rank #1 (Strong Buy) is expected to grow its earnings by 125% this year.

Nutrien is the world's largest provider of crop inputs and services. It produces around 27 million tonnes of potash, nitrogen and phosphate products world-wide.

It also has a significant agribusiness, including its retail segment, Nutrien Ag Solutions.

A Rare Earnings Miss in the Second Quarter

On Aug 9, Nutrien reported its second quarter results and actually missed on the Zacks Consensus by a penny.

Earnings were $2.08 versus the Consensus of $2.09.

It had beat 4 quarters in a row prior to this earnings miss.

But it still saw record earnings for the second quarter, and the first half of the year.

Potash production and sales drove the quarter and first half of the year with sales volumes of nearly 7 million tonnes in the first six months of the year.

Retail Digital Platform Sales Soar Again

Nutrien Ag Solutions, its retail segment, saw record results due to organic growth supported by strong demand for grains and oilseeds.

Sales on the company's digital platform, which launched in 2019, continued to soar. Sales came in at $1.6 billion in the first half of 2021, which was more than the ENTIRE 2020's sales of $1.2 billion.

Sales on the digital platform were 19% of total sales in the first half of the year, up from 10% in the first six months of 2020.

Record first half crop nutrient sales volumes, and higher crop nutrient prices, helped push gross margins higher in the second quarter and the first half of the year.

In the first half of 2021, crop nutrients sales rose 23% to $4.06 billion from $3.31 billion with gross margins moving up to 23% from 22%.

Crop Protection products sales were up 9%, Seed was up 9% and Merchandise was up 6%.

Raised Full Year Earnings Guidance

After posting a strong second quarter, it's not surprising that Nutrien provided higher guidance for the rest of the year.

However, its new full year guidance range of $4.60 to $5.10 per share was well above what the analysts were looking for.

As a result, the analysts have been raising estimates to match.

The 2021 Zacks Consensus has jumped to $4.06 from $3.84 in the last week. That's earnings growth of 125% but it's still below the $4.60 range given by Nutrien, so it may go higher still.

2 estimates were also revised higher for 2022, pushing up next year to $4.39, which is another 8% growth.

Shares Up, But Still Cheap

Shares have surged over the last year, gaining 62% in that time.

In 2021, they are up 29.2%, beating the S&P 500 which is up about 19%.

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Because the earnings are on the rise, the forward P/E is still attractive at 15.7.

Nutrien is shareholder friendly and has raised its dividend 3 times since 2018. It currently pays a dividend yielding 2.9%.

In addition to Nutrien, several of the fertilizer companies are Zacks Rank #1 (Strong Buy) stocks right now including Intrepid Potash (IPI - Free Report) and Mosaic (MOS - Free Report) but neither of those have Nutrien's retail platform.

For those investors interested in owning in the agriculture sector, Nutrien is one to keep on the short list.


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Intrepid Potash, Inc (IPI) - free report >>

Nutrien Ltd. (NTR) - free report >>