It hasn't been a great morning session for Nutrien investors, who have watched their shares sink by -1.3% to a price of $47.68. Some of you might be wondering if it's time to buy the dip. If you are considering this, make sure to check the company's fundamentals first to determine if the shares are fairly valued at today's prices.
Nutrien's Earnings and Assets May Be Undervalued:
Nutrien Ltd. provides crop inputs and services. The company operates through four segments: Retail, Potash, Nitrogen, and Phosphate. The company belongs to the Industrials sector, which has an average price to earnings (P/E) ratio of 25.42 and an average price to book (P/B) ratio of 3.2. In contrast, Nutrien has a trailing 12 month P/E ratio of 29.8 and a P/B ratio of 0.94.
When we divide Nutrien's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -0.57. Since it's negative, the company has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
Generally Positive Cash Flows but a Declining EPS Growth Trend:
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $19,636 | $20,084 | $20,908 | $27,712 | $37,884 | $29,056 |
| Gross Margins | 27% | 27% | 25% | 34% | 41% | 28% |
| Net Margins | 18% | 5% | 2% | 11% | 20% | 4% |
| Net Income (M) | $3,573 | $992 | $459 | $3,179 | $7,687 | $1,282 |
| Earnings Per Share | $5.72 | $1.7 | $0.81 | $5.52 | $14.18 | $2.53 |
| EPS Growth | n/a | -70.28% | -52.35% | 581.48% | 156.88% | -82.16% |
| Free Cash Flow (M) | $2,052 | $3,665 | $3,323 | $3,886 | $8,110 | $5,066 |
| Total Debt (M) | $7,579 | $8,553 | $10,047 | $7,521 | $8,040 | $8,913 |
| Net Debt / EBITDA | 2.62 | 2.15 | 2.97 | 1.04 | 0.56 | 1.62 |
| Current Ratio | 1.4 | 1.17 | 1.35 | 1.11 | 1.14 | 1.17 |
