Nutrien Ltd. NTR faced declining earnings in 2023 and is likely to experience another drop in 2024. Can this Zacks #5 (Strong Sell) rebound in 2025?
Nutrien is a Canadian agribusiness company that provides crop inputs and services globally. Its operations include agriculture and retail, featuring products like potash, nitrogen, crop protection, and seeds.
Nutrien Reports Disappointing Q3 2024 Results
On November 6, 2024, Nutrien announced disappointing results for the third quarter, missing the Zacks Consensus by a significant margin. The company reported earnings of $0.39, falling short of analyst expectations of $0.44, representing an 11.4% miss.
This marks eight misses out of the last ten quarters for the company. In terms of retail sales, Nutrien saw a decline of 6%, reporting $3.27 billion compared to $3.49 billion in the same quarter last year.
Meanwhile, potash sales dropped 9% to $884 million, down from $972 million in the third quarter of 2023. Although lower net selling prices were noted, these were partially balanced by record sales volumes.
In the nitrogen sector, prices showed an upward trend, helping sales rise by 10% to $793 million, up from $723 million a year ago.
Nutrien’s remarks on market conditions indicated, “Favorable growing conditions in the US have supported expectations for record US corn and soybean yields and significant soil nutrient removal in 2024.”
However, they also added that “Prospective crop margins have declined compared to the historically high levels in recent years, but we believe most growers in the US Midwest remain in a healthy financial position.”
Adding to their insight, Nutrien noted, “Global grain stocks remain below historical average levels, supporting export demand for North American crops and firm prices for key agriculture commodities such as rice, sugar, and palm oil.”
Analysts Downgrade Earnings Forecast for Nutrien
The agricultural sector has faced challenges over the past two years, with Nutrien’s earnings dropping 66.3% in 2023. Another decline of 20.1% is anticipated for 2024.
Looking ahead to 2025, eight analyst estimates have been revised downward in the last two months. The Zacks Consensus now predicts a modest earnings growth of 3.5%, rising to $3.68 from the $3.55 projected for 2024.
The following price and consensus chart illustrates the recent trends.
Image Source: Zacks Investment Research
In a year when the S&P 500 has gained nearly 30%, Nutrien shares are struggling, showing a decline year-to-date.
Image Source: Zacks Investment Research
Despite the downturn, Nutrien appears undervalued, with a forward price-to-earnings (P/E) ratio of 13.6. Generally, a P/E ratio below 15 is considered indicative of a value stock.
Moreover, investors can look forward to a dividend yield of 4.5%, rewarding patience during these challenging times.
Without a rebound in potash and nitrogen prices, however, Nutrien’s earnings may continue to suffer. Potential investors in the fertilizer and agribusiness sectors might consider waiting for price stability before making any moves.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
