Nutrien Earnings: Surge in Potash Prices and...

Table of Contents Show

Key Morningstar Metrics for Nutrien

What We Thought of Nutrien’s Earnings

Nutrien NTR shares were up slightly in Feb. 20 trading, as management’s 2025 guidance for retail profit growth, fertilizer volume growth, and rising fertilizer prices should drive profit growth.

Why it matters: Nutrien’s companywide profits declined in 2023 and 2024, largely due to falling fertilizer prices. In response, management focused on reducing unit production costs and temporarily reducing volumes to support higher prices.

The strategy is working. As potash and nitrogen demand continues to grow, we see prices for both fertilizers rising in 2025 to our mid-cycle levels. Higher prices and volumes should drive double-digit profit growth in both segments.In the retail business, Nutrien is looking to reduce costs by optimizing its stores. The company also aims to expand its proprietary product offerings, which are higher-margin. We expect higher sales and lower costs will boost retail profits in 2025.

The bottom line: We’ve slightly raised our fair value estimate to $C99 per share due to currency movements since our last update.

We view the shares as currently undervalued, trading roughly 25% below our fair value estimate and in 4-star territory. We point to rising potash and nitrogen prices and higher profits as catalysts for the shares in 2025.

Big picture: We expect Nutrien will see a limited impact if US tariffs materialize. The United States imports most of its potash from Canada, which could be subject to tariffs.

However, potash prices below midcycle levels with crop prices at midcycle levels should mean farmers could absorb some of the cost without hurting demand. Additionally, we expect a lot of potash has already been imported into the US, which would reduce the tariff effect in 2025.