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Last week saw the newest yearly earnings release from Nutrien Ltd. (TSE:NTR), an important milestone in the company's journey to build a stronger business. Revenues were US$20b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.81, an impressive 97% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Nutrien after the latest results.
Taking into account the latest results, the current consensus from Nutrien's 18 analysts is for revenues of US$21.4b in 2021, which would reflect an okay 6.9% increase on its sales over the past 12 months. Per-share earnings are expected to surge 182% to US$2.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$21.4b and earnings per share (EPS) of US$2.23 in 2021. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$57.44, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Nutrien analyst has a price target of US$88.79 per share, while the most pessimistic values it at US$58.55. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Nutrien shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's pretty clear that there is an expectation that Nutrien's revenue growth will slow down substantially, with revenues next year expected to grow 6.9%, compared to a historical growth rate of 35% over the past five years. Compare this to the 26 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 5.7% per year. Factoring in the forecast slowdown in growth, it looks like Nutrien is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. The consensus price target held steady at US$57.44, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Nutrien going out to 2025, and you can see them free on our platform here.
It is also worth noting that we have found 4 warning signs for Nutrien (1 makes us a bit uncomfortable!) that you need to take into consideration.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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