Shares of Agrium Inc. (TSX:AGU)(NYSE:AGU) have fallen 13% since early March and investors who missed the big run that started last October are wondering if they should buy the stock now.

Let’s take a look at the current situation to see if Agrium deserves to be in your portfolio.

Cash flow

Agrium recently completed a large expansion at its Vanscoy Potash facility that will eventually increase production by as much as one million tonnes. This is great news for dividend investors because the reduction in capital outlays, plus the added revenue from greater output, should mean more free cash flow available for distributions.

If everything is working properly, production costs per tonne will decrease, providing an added boost to margins and cash flow.

Dividends and share buybacks

In its Q4 2014 earnings statement, Agrium gave investors a heads up that distributions could be going higher when it increased the target dividend payout ratio range from 25-35% to 40-50%. Agrium currently pays a quarterly dividend of US$0.78 that yields about 3%.

The company also plans to buy back as much as 5% of its outstanding common shares by the end of January next year.

Wholesale outlook

Agrium is a producer and distributor of agricultural products and services. The company is unique in the fertilizer space because it operates both wholesale and retail operations.

The wholesale division produces nitrogen, potash, and phosphate for sale to the global market. Nitrogen production is the company’s largest operation and that division is getting a nice boost from low natural gas prices. The fuel is the primary input cost and the plunge in natural gas prices should be a huge boost to Agrium’s margins.

How low have gas prices dropped?

Agrium’s average natural gas cost in Q4 2014 was US$3.47/MMBtu. The current market price is running close to $2.50/MMBtu and analysts don’t see a recovery coming in the near term.

On the potash side, global demand hit a record 61 million tonnes in 2014. Prices are recovering slowly after the 25% drop in 2013.

Agruim’s phosphate division had a strong Q4 compared with the previous year and the 2015 numbers should be stable.

Retail woes on the horizon

The company’s retail operation consists of more than 1,300 stores that provide growers with seed, fertilizer, and crop protection products.

Last year Agrium’s retail division had record EBITDA of US$1.1 billion. A big harvest in 2014 is putting pressure on crop prices this year and the U.S. Department of Agriculture says farm revenues are expected to fall in 2015.

This could impact Agrium’s retail sales and the company has said it expects a drop in North American crop nutrients consumption this year.

Should you buy?

Agrium is a cash machine and the company provides products that will continue to see increased demand for decades. However, a market-share war appears to be brewing among global potash producers and that is making some investors nervous.

The stock has been falling for the past two months and the trend could continue in the near term.

Agrium trades at a reasonable 11 times forward earnings. At this point I would consider it a hold, but any further weakness in the coming months should be viewed as a long-term buying opportunity. Investors might want to see how the Q1 2015 numbers turn out before taking the plunge.

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Fool contributor Andrew Walker has no position in any stocks mentioned. Agrium Inc. is a recommendation of Stock Advisor Canada.