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Nutrien (NTR) Benefits From Demand Strength Amid Cost Woes
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Nutrien Ltd. (NTR - Free Report) is gaining from higher prices and healthy demand for crop nutrients, its actions to boost production and strategic acquisitions amid headwinds from higher costs.
Shares of Nutrien, a Zacks Rank #3 (Hold) stock, have gained 21.1% over the past year against the 30.6% rise of its industry.
Image Source: Zacks Investment Research
Nutrien is benefiting from solid demand and higher prices for fertilizers, backed by the strength in global agriculture markets. The company is also gaining from higher net realized selling prices for crop nutrients as witnessed in the first quarter of 2022. It saw higher sales across all the segments in the quarter, driven by higher prices and strong demand.
Potash prices have strengthened on the back of robust global demand and tight supply. Tight inventory along with healthy demand is also driving phosphate prices globally. Lower global supply availability stemming from reduced operating rates, strong demand and a spike in energy prices are likely to have also boosted nitrogen prices. Supply constraints are driving ammonia and nitrate prices. Higher prices are expected to drive the company’s sales and margins for full-year 2022.
Nutrien is also taking actions to boost potash production in the wake of tightening global potash market conditions. The move is in response to strong market fundamentals and is geared to enable its customers have the crop inputs they require to feed a growing population. Its actions to boost production are supporting its potash sales volumes.
The company is also well placed to gain from acquisitions, cost efficiency, and increased adoption of its digital platform. It continues to expand its footprint in Brazil through acquisitions.
However, the company’s nitrogen business is exposed to headwinds from higher natural gas prices. Natural gas is a key component in nitrogen production costs. Nutrien is seeing a rise in cost of goods sold per tons for nitrogen as a result of higher natural gas costs. Higher North American gas index prices and increased gas costs in Trinidad led to an increase in natural gas prices in its cost of production in the first quarter. Higher gas costs may continue to impact the company’s nitrogen margins over the near term.
Nutrien also faces headwinds from elevated raw material costs. The company witnessed significantly higher sulfur and ammonia input costs in the Phosphate unit in the last reported quarter. It is also seeing higher input costs in Nitrogen and Potash units. Nutrien is expected to see continued pressure from raw material cost inflation.
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Cabot Corporation (CBT - Free Report) and Allegheny Technologies Inc. (ATI - Free Report) .
Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 26.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 7% in a year. The company flaunts a Zacks Rank #1 (Strong Buy).
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 2.5% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 14% over a year.
Allegheny, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 1,046.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 18.3% upward in the past 60 days.
Allegheny’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI shares are up around 8% in a year.
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Nutrien (NTR) Benefits From Demand Strength Amid Cost Woes
Nutrien Ltd. (NTR - Free Report) is gaining from higher prices and healthy demand for crop nutrients, its actions to boost production and strategic acquisitions amid headwinds from higher costs.
Shares of Nutrien, a Zacks Rank #3 (Hold) stock, have gained 21.1% over the past year against the 30.6% rise of its industry.
Image Source: Zacks Investment Research
Nutrien is benefiting from solid demand and higher prices for fertilizers, backed by the strength in global agriculture markets. The company is also gaining from higher net realized selling prices for crop nutrients as witnessed in the first quarter of 2022. It saw higher sales across all the segments in the quarter, driven by higher prices and strong demand.
Potash prices have strengthened on the back of robust global demand and tight supply. Tight inventory along with healthy demand is also driving phosphate prices globally. Lower global supply availability stemming from reduced operating rates, strong demand and a spike in energy prices are likely to have also boosted nitrogen prices. Supply constraints are driving ammonia and nitrate prices. Higher prices are expected to drive the company’s sales and margins for full-year 2022.
Nutrien is also taking actions to boost potash production in the wake of tightening global potash market conditions. The move is in response to strong market fundamentals and is geared to enable its customers have the crop inputs they require to feed a growing population. Its actions to boost production are supporting its potash sales volumes.
The company is also well placed to gain from acquisitions, cost efficiency, and increased adoption of its digital platform. It continues to expand its footprint in Brazil through acquisitions.
However, the company’s nitrogen business is exposed to headwinds from higher natural gas prices. Natural gas is a key component in nitrogen production costs. Nutrien is seeing a rise in cost of goods sold per tons for nitrogen as a result of higher natural gas costs. Higher North American gas index prices and increased gas costs in Trinidad led to an increase in natural gas prices in its cost of production in the first quarter. Higher gas costs may continue to impact the company’s nitrogen margins over the near term.
Nutrien also faces headwinds from elevated raw material costs. The company witnessed significantly higher sulfur and ammonia input costs in the Phosphate unit in the last reported quarter. It is also seeing higher input costs in Nitrogen and Potash units. Nutrien is expected to see continued pressure from raw material cost inflation.
Nutrien Ltd. Price and Consensus
Nutrien Ltd. price-consensus-chart | Nutrien Ltd. Quote
Stocks to Consider
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation (ALB - Free Report) , Cabot Corporation (CBT - Free Report) and Allegheny Technologies Inc. (ATI - Free Report) .
Albemarle has a projected earnings growth rate of 231.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 26.5% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 20%. ALB has gained roughly 7% in a year. The company flaunts a Zacks Rank #1 (Strong Buy).
Cabot, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 2.5% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 14% over a year.
Allegheny, currently sporting a Zacks Rank #1, has a projected earnings growth rate of 1,046.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 18.3% upward in the past 60 days.
Allegheny’s earnings beat the Zacks Consensus Estimate in the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI shares are up around 8% in a year.