Nutrien (TSX: NTR) is a Saskatoon-based fertilizer company. This company is the largest potash producer on the planet and the third-largest producer of nitrogen fertilizer on earth. Today, I want to discuss whether this top TSX stock is worth snatching up in the month of April. Let’s dive in.
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How has Nutrien stock performed over the past year?
This stock has been on a roller-coaster ride since it gained huge momentum in the winter and spring of the previous year. Shares of Nutrien have dropped 5.4% month over month as of close on Monday, April 10. That has pushed the stock into negative territory for the year-to-date period.
Shares of Nutrien climbed to record highs during the previous year’s bull market. Investors who want to look at its year-over-year performance and even further back can play with the interactive price chart below.
Here’s why this stock gained momentum in 2022…
Nutrien stock surged after it was reported that Russia had launched a full-scale invasion of Ukraine in February 2022. Ukraine has been frequently referred to as the “breadbasket of Europe.” The country is one of the largest grain exporters on the planet and its land is some of the most fertile and nutrient-rich on the planet. Russia’s invasion threatened Ukraine’s ability to trade in this arena.
Canada also boasts vast tracks of fertile land and is a world leading producer of fertilizer. Nutrien, a Canadian heavy hitter in this market, saw its stock price benefit in a big way after markets began to digest the realities of Russia’s attack on its smaller neighbour.
Fortunately, Ukraine has been able to reorient its agricultural production with help from its Western allies. In March, a top Ukrainian agricultural ministry official said that there would be no limit on wheat exports for the 2023/2024 July-June season. Indeed, the winter harvest looks to be larger than expected.
While this is good news for Ukraine, this does represent something of a reset for Nutrien as we move into the second quarter of the 2023 calendar year. I’m still bullish on this Canadian staple going forward.
Should investors be optimistic about Nutrien in 2023 and beyond?
This company released its fourth-quarter and full-year fiscal 2022 earnings on February 15, 2023. Management reviewed Nutrien’s successes since the beginning of the previous year. “Geopolitical events caused an unprecedented level of supply disruption and market volatility across agriculture, energy, and fertilizer markets in 2022,” said Nutrien chief executive officer Ken Seitz.
Despite its recent claims, Nutrien believes that Ukrainian crop production and exports will continue to lag due to the ongoing war with Russia for at least one more season. Spot prices for corn, soybeans, and wheat are up 25-50% from the previous year, which incentivizes a significant increase in global crop production.
For the full year in fiscal 2022, Nutrien delivered net earnings of $7.7 billion, or $14.18 diluted net earnings per share (EPS). Moreover, sales increased 37% to $37.8 billion. EBITDA stands for earnings before interest, taxes, depreciation, and amortization. This company reported adjusted EBITDA of $12.2 billion in fiscal 2022 — up 71% from the previous year. Retail adjusted EBITDA jumped to an all-time high of $2.3 billion. Meanwhile, potash adjusted EBITDA more than doubled to $5.8 billion, and nitrogen adjusted EBITDA surged 70% to $3.9 billion.
Is Nutrien stock a buy today?
Looking forward, Nutrien projects adjusted EBITDA between $8.4 billion and $10.0 billion in fiscal 2023. Meanwhile, it forecasts adjusted net EPS of $8.45 to $10.65. Shares of this TSX stock currently possess a very attractive price-to-earnings ratio of five. The Relative Strength Index (RSI) is a technical indicator that measures the price momentum of a given security. Nutrien saw its RSI dip into technically oversold territory in the previous week. Better yet, this stock offers a quarterly dividend of $0.53 per share. That represents a 2.9% yield.
I’m looking to snatch up Nutrien stock, as it offers terrific value right now and boasts a phenomenal balance sheet. The company is on track for another strong year in fiscal 2023, albeit not as strong as its record-breaking 2022.
