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Highlights
- In the wake of the Russia-Ukraine war, fertilizer stocks have stirred an interest among investors.
- A Canadian company, for one, saw its stock price rocket by over 42 per cent quarter-to-date (QTD).
- The C$ 72-billion market cap company generated a free cash flow of US$ 1.54 billion in the latest quarter, representing a sharp increase of 690 per cent YoY.
The fertilizer market has been struggling lately due to high input costs and severe climatic conditions. On top of that, sanctions against Russia, a leading exporter of fertilizers and natural gas to the global market, has poised supply chain imbalance pushing fertilizers price higher.
A Canadian fertilizer company, in response to the uncertain potash supply, planned to raise its 2022 potash production capability to about 15 million tonnes (an addition of nearly one million tonnes to previous projections).
Canadian fertilizer is already said to be exported to over 75 countries around the globe and is reportedly the third-highest volume commodity shipped by Canada’s railways. According to industry association Fertilizer Canada, the fertilizer industry creates C$ 23 billion in annual economic activity in the country and contributes 12 per cent to the total global fertilizer supply.
Notably, some 95 per cent of the total potash produced in the country is said to be exported to the rest of the world.
In the wake of the Russia-Ukraine war, fertilizer stocks have stirred an interest among investors. The Canadian company mentioned above, for one, saw its stock price rocket by over 42 per cent quarter-to-date (QTD).
We are talking about Nutrien Ltd (TSX:NTR), which is said to be among the largest crop input and solutions providers helping farmers to increase food production sustainably.
Let’s dive deeper into Nutrien’s performance.
Nutrien Ltd (TSX:NTR) posted net earnings growth of 282% YoY in Q4 FY2021
The C$ 72-billion market cap company increases its sales to US$ 7.26 billion in Q4 FY2021, reflecting a year-over-year (YoY) rise of 79 per cent. The fertilizer producer posted net earnings of US$ 1.2 billion in the latest quarter compared to US$ 316 million in the same period of 2020.
Nutrien’s Q4 adjusted EBITDA jumped 221 per cent YoY to US$ 2.46 billion in 2021. Its Q4 diluted earnings per share (EPS) also grew by 284 per cent YoY to US$ 2.11.
The agriculture company generated a free cash flow of US$ 1.54 billion in the latest quarter, representing a sharp increase of 690 per cent YoY.
Nutrien is also expected to dole put a quarterly dividend of US$ 0.48 apiece on April 14, up from the previous pay-out of US$ 0.46.
Image source: © 2022 Kalkine Media Inc
How did Nutrien stock perform?
The Nutrien stock galloped by almost 92 per cent in the past one year. NTR stock closed at C$ 135.12 apiece on Friday, March 25, which was roughly 105 per cent up from a 52-week low of C$ 66.05 (April 21, 2021).
Bottomline
Fertilizer stocks like Nutrien can continue to gain traction amid the ongoing issues like limited supply and higher fertilizer prices.
However, investors should closely monitor market factors, like CP Rail stoppage, which could affect Nutrien’s supply chain network and shipments, affecting its business.
