Bear of the Day: Nutrien (NTR)
Nutrien Ltd. (NTR) is seeing a rebound in 2019 as fertilizer prices improve. However, it's now a Zacks Rank #5 (Strong Sell) as earnings estimates have been cut in the last 3 months.
Nutrien is a Canadian-based provider of crop inputs and services. It distributes potash, nitrogen and phosphate products world-wide. The company also runs an extensive agriculture retail network.
Expanding Its Retail Business in 2019
On Feb 19, Nutrien announced it was buying Ruralco Holdings, an Australian agriservices business with over 500 locations.
This is expected to enhance the company's business in Australia through its Landmark operations and is projected to be immediately accretive to Nutrien.
On Feb 28, it bought Van Horn, a central Illinois retailer with 11 locations that services 18 counties. This was also expected to increase its retail reach.
Outlook for 2019
On Feb 6, Nutrien reported fourth quarter and 2018 results. It met on the Zacks Consensus Estimate of $0.54.
However, one of the wettest falls in 100 years in the United States caused a challenge to the farming industry.
In February, it was too early to know how the spring weather conditions would shape up. But the Nebraska flooding and heavy rainfall in the Midwest can't be helping.
With normal spring conditions, Nutrien expected strong potash consumption in the first half of 2019, as growers were replenishing the soil after elevated potash removal in 2018.
Nutrien's CEO Chuck Magro also commented in the earnings release, "For 2019, we expect strong crop input demand in the first half of the year due to the limited application window in the fall of 2018, a recent improvement in crop prices and higher corn acres in the US."
Why the Strong Sell Recommendation?
The analysts have been cutting the earnings estimates over the last 30 days.
For 2019, 2 were cut, but one was raised, but the Zacks Consensus Estimate fell to $3.02 from $3.36.
That's still a gain of 12.3% as the company made only $2.69 in 2018.
But the cuts were enough to send the Rank to a #5 (Strong Sell).
Remember, the Zacks Rank is a short term recommendation of 1-3 months. It can change daily, depending on changes in analyst estimates.
Shares Up on the Year
Like many stocks, Nutrien has gotten a boost in 2019 as the shares are up 10.1% year-to-date.
It trades with an attractive forward P/E of 16.9.
It's also shareholder friendly, with a buyback program and a dividend, currently yielding 3.4%.
If you're interested in investing in the fertilizers, you may want to consider Mosaic (MOS). It's a Zacks Rank #3 (Hold) and is cheaper, with a forward P/E of just 11.2.
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