Morningstar Financial Research has identified Nutrien as an undervalued stock.
Nutrien trades at a 31% discount to its fair value estimate of $97.
The company has paid dividends consistently for over 10 years. "The dividend can generally be paid using free cash flow generated by the more stable retail business," says Morningstar strategist Seth Goldstein. "As a result, Nutrien should be able to maintain the dividend even when fertilizer prices are at cyclically low levels."
Despite operating in a highly cyclical industry, Nutrien's balance sheet is sound and its debt maturities are manageable over the next several years. Because of this, Nutrien should meet its financial obligations. Investments in digital platforms will also allow the retail business to transition to the increasing digitalization of the agriculture input market.
Goldstein recently raised the stock's fair value to C$97 per share from C$96, incorporating strong third-quarter earnings. Nutrien has a four star rating at Morningstar.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.