Nutrien Ltd. (NTR Quick QuoteNTR - Free Report) is expected to benefit from higher demand for crop nutrients, its actions to reduce costs and strategic acquisitions amid headwinds from lower fertilizer prices.

The company’s shares are down 29.7% over a year, compared with a 28.6% decline recorded by its industry.

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Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.

Healthy Demand, Acquisitions and Cost Cuts Aid NTR

Nutrien is gaining from increased demand for fertilizers, backed by the strength in global agriculture markets. It is seeing strong demand in its major markets, particularly North America. NTR delivered record potash sales volumes in the third quarter of 2023 and gained from strong crop nutrient demand in North America.

Potash demand is being driven by strong grower economics and higher crop commodity prices. The phosphate market is also benefiting from higher global demand and low producer and channel inventories. Demand for nitrogen fertilizer also remains healthy in major markets. Global nitrogen requirement is being driven by demand in North America, India and Brazil.

Moreover, cost and operational efficiency initiatives are expected to aid NTR’s performance. It remains focused on lowering the cost of production in the potash business. The company has also announced a number of strategic actions to reduce its controllable costs and boost free cash flow this year and beyond. Lower natural gas costs are also contributing to a decline in its cost of goods sold.

The company continues to expand its footprint in Brazil through acquisitions. It expanded its network through the completion of 21 retail acquisitions in 2022 with a focus on expanding its Brazil network. NTR should also gain from increased adoption of its digital platform.

Softer Fertilizer Prices a Concern

Weaker fertilizer prices are likely to weigh on Nutrien’s performance. Prices of phosphate and potash have retreated since the second 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 driven by a rise in global supply availability. Lower prices are expected to hurt NTR’s profitability.

Nutrien Ltd. Price and Consensus

 

Nutrien Ltd. price-consensus-chart | Nutrien Ltd. Quote

Stocks to Consider

Better-ranked stocks worth a look in the basic materials space include, Cameco Corporation (CCJ Quick QuoteCCJ - Free Report) , Carpenter Technology Corporation (CRS Quick QuoteCRS - Free Report) and Cabot Corporation (CBT Quick QuoteCBT - Free Report) .

Cameco has a projected earnings growth rate of 156% for the current year. The Zacks Consensus Estimate for CCJ’s current-year earnings has been revised upward by 6.7% over the past 60 days.  The stock is up around 84% in a year. CCJ currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $3.96, indicating a year-over-year surge of 247.4%. CRS, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 50% in the past year.

The consensus estimate for Cabot’s current fiscal-year earnings is pegged at $6.58, indicating a year-over-year rise of 22.3%. CBT, carrying a Zacks Rank #2 (Buy), beat the Zacks Consensus Estimate in three of the last four quarters while missed once, with the average earnings surprise being 2.3%. The company’s shares are up around 5% in the past year.