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Why Is Nutrien (NTR) Up 10.2% Since Last Earnings Report?

It has been about a month since the last earnings report for Nutrien (NTR). Shares have added about 10.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Nutrien due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Nutrien's Earnings and Revenues Lag Estimates in Q3

Nutrien recorded profits of $1,583 million or $2.94 per share in third-quarter 2022, up from a profit of $726 million or $1.25 in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) were $2.51. The bottom line missed the Zacks Consensus Estimate of $3.92.

Sales climbed around 36% year over year to $8,188 million in the quarter. The figure, however, missed the Zacks Consensus Estimate of $9,015.9 million. The company benefited from higher selling prices and strong Retail performance in the quarter.

Segment Highlights

Sales in the Nutrien Ag Solutions (Retail) segment rose 19% year over year to $3,980 million in the quarter. Sales of crop nutrients increased in the quarter on higher prices. Sales of crop protection products also increased owing to higher selling prices and increased sales in proprietary products.

Potash division’s sales climbed 69% year over year to $2,004 million driven by higher net realized selling prices. Volumes in North America were impacted by a compressed spring application season. Selling prices increased on the back of tight supply.

Sales in the Nitrogen segment were $1,507 million, up around 55% year over year. The upside can be attributed to higher net realized selling prices and higher volumes. Sales volume rose on strong demand and higher offshore urea ammonium nitrate sales. The company witnessed higher natural gas costs in the quarter.

Sales in the Phosphate segment were $567 million, up 41% year over year on the back of higher net realized selling price and volumes. Prices rose in sync with an increase in global benchmark prices. Volumes rose in the quarter, aided by strong offshore fertilizer sales.

Financials

At the end of the quarter, Nutrien had cash and cash equivalents of $823 million, down around 53% year over year. Long-term debt was $7,020 million, up roughly 42% year over year.

Cash provided by operating activities was $878 million for the reported quarter.

The company repurchased around 40 million shares year-to-date as of Nov 1, 2022, for a total of roughly $3.5 billion.

Guidance

Nutrien revised its full-year 2022 adjusted EBITDA guidance and full-year adjusted net earnings per share guidance factoring in lower expected Potash earnings due to reduced potash sales volumes and realized prices, which more than offset stronger anticipated Retail earnings.

The company now expects adjusted EBITDA of $12.2-$13.2 billion (down from $14-$15.5 billion) for full-year 2022. Adjusted EPS has been forecast in the band of $13.25-$14.50 (down from $15.80-$17.80). Nutrien also sees sustaining capital expenditure of $1.3-$1.4 billion in 2022.

The company also now sees potash sales volumes of between 12.5 million and 12.9 million tons in 2022, down from the earlier view of between 14.3 million and 14.9 million tons.  Nitrogen sales volumes are now projected in the band of 10.4-10.5 million tons for the year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -27.8% due to these changes.

VGM Scores

At this time, Nutrien has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nutrien has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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