Nutrien Ltd. ( NTR Quick Quote NTR - Free Report) is expected to gain from higher demand for crop nutrients, its actions to boost production and strategic acquisitions amid headwinds from lower prices. The company’s shares are down 33.5% over a year, compared with a 34.3% decline recorded by its industry.
Image Source: Zacks Investment Research Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment. Higher Demand, Expansion Moves Aid NTR
Nutrien is well-placed to benefit from increased demand for fertilizers, backed by the strength in global agriculture markets. Strong grower economics and higher crop commodity prices are expected to drive potash demand globally. The company sees global potash demand to rise significantly year over year in the second half of 2023 on lower inventories and improved grower affordability. It expects the majority of the increase in Brazil and North America, its two largest markets for potash. NTR also expects demand to rise in 2023 on the back of higher global crop production, reduced channel inventories and the need to replenish potassium levels in the soil.
Nutrien is also taking actions to boost potash production. The move is in response to strong market fundamentals and is geared to enable its customers have the crop inputs they require to feed a growing population. Its actions to boost production are likely to support its potash sales volumes. The company is also well placed to gain from acquisitions, cost efficiency, and increased adoption of its digital platform. It continues to expand its footprint in Brazil through acquisitions. The company expanded its network through the completion of 21 retail acquisitions in 2022 with a focus on expanding its Brazil network. Weak Prices May Play Spoilsport
Lower fertilizer prices are expected weigh on the company’s performance over the near term. Prices of phosphate and potash have retreated since the back half of 2022 from their peak levels attained in the first half riding on the impacts of the Russia-Ukraine war and disruptions due to the sanctions in Belarus. Global nitrogen prices have declined since the beginning of 2023. Lower prices are expected to hurt NTR’s profitability in 2023.
Nutrien has lowered its full-year 2023 adjusted EBITDA and adjusted net earnings per share guidance partly due to lower expected benchmark fertilizer prices. The company now sees adjusted EBITDA of $6.5-$8 billion for full-year 2023, down from $8.4-$10 billion it expected earlier. Adjusted earnings per share guidance has been also lowered to $5.5-$7.5 from the prior view of $8.45-$10.65.
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include
L.B. Foster Company ( FSTR Quick Quote FSTR - Free Report) , Gold Fields Limited ( GFI Quick Quote GFI - Free Report) , and Linde plc ( LIN Quick Quote LIN - Free Report) . L.B. Foster currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for FSTR's current-year earnings has been stable over the past 60 days. You can see . the complete list of today’s Zacks #1 Rank stocks here L.B. Foster’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 140.5%, on average. FSTR has gained around 6% in a year. Gold Fields currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for GFI’s current-year earnings has been revised 23.5% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, reflecting an expected year-over-year growth of 8.3%. Gold Fields’ shares have popped roughly 67% in the past year. Linde currently carries a Zacks Rank #2. The Zacks Consensus Estimate for LIN’s current-year earnings has been revised 4.4% upward in the past 60 days. Linde beat Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 6.9% on average. LIN’s shares have gained roughly 14% in the past year.