Nutrien has demonstrated remarkable resilience in the face of economic headwinds. Despite a challenging fiscal year that saw the company write down its South American retail businesses by $465 million due to higher interest rates and a subdued profit outlook, the firm emerged with robust earnings.
The company’s commitment to shareholder value is evident in its recent dividend increase and its plan to repurchase 5% of its outstanding shares.
Meanwhile, the stock trades at a modest 13.0 times the company’s 2024 earnings forecast.
[ofie_ad]
NUTRIEN LTD. (Toronto symbol NTR) is the world’s largest producer of agricultural fertilizers. It also sells seeds, fertilizers and agricultural products to farmers through some 2,000 stores in Canada, the U.S., Australia and South America.
Nutrien took its current form on January 1, 2018, when Agrium Inc. (old symbol AGU) merged with rival Potash Corp. of Saskatchewan (old symbol POT).
Potash Corp. shareholders received 0.40 shares in Nutrien for each POT share they held; Agrium investors received 2.23 shares for each AGU share.
The company now wants to sell its retail operations in Argentina, Chile and Uruguay, but will hang on to its operations in Brazil. That’s partly because the new government of Argentina recently devalued its currency (the peso) in relation to the U.S. dollar.
Nutrien will probably try to find local partners instead of selling all of its businesses in Brazil. It’s also working to improve its inventory and distribution problems.
Nutrien may also try to sell its 50% stake in a joint venture with Argentina’s state-run oil company YPF SA. That venture makes urea and ammonia.
Mining Stocks: Modest valuation and shareholder-friendly policies offer opportunity for Nutrien
Due to higher interest rates and a lower profit outlook, Nutrien wrote down the value of its South American retail businesses by $465 million U.S. in 2023. Excluding that charge and other unusual items, the company earned $2.21 billion U.S., or $4.44 U.S. a share, in 2023.
Meanwhile, Nutrien will benefit from its plan to slow potash production in response to weaker selling prices. It’s also cutting costs and improving efficiency. The stock now trades at a moderate 13.0 times the $3.98 U.S. a share that the company will probably earn in 2024.
With the April 11, 2024, payment, the company raised your quarterly dividend by 1.9%. Investors now receive $0.54 U.S. a share instead of $0.53 U.S. The new annual rate of $2.16 U.S. yields a high 4.2%. Nutrien also plans to buy back 5% of its outstanding shares over the next year.
Nutrien has now increased its dividend by an average 4.7% annually over the past five years. Its TSI Dividend Sustainability Rating is Above Average.
Recommendation in The Successful Investor: Nutrien Ltd. is a buy.
