NTR: The Future of Agriculture Investments
With the rapidly growing population worldwide and the evolution of innovative technologies, the agriculture industry is expected to experience robust growth in the upcoming years. Agricultural development is one of the most powerful tools to eradicate extreme poverty, foster shared prosperity, and feed an estimated population of 10 billion by 2050.
Given this backdrop, let’s take a close look at fundamentally strong agriculture stocks Nutrien Ltd. (NTR), ICL Group Ltd (ICL), and Dole plc (DOLE), cultivating buy opportunities.
The agriculture market has transformed significantly in recent years with an enhanced focus on vertical farming, plant breeding, precision farming, smart irrigation, and technological innovation. Moreover, a surging demand for sustainable and carbon-neutral agriculture continues to propel the industry’s expansion.
According to a report published by MarketsandMarkets, the global agriculture market is expected to grow from $81.50 billion in 2023 to $94.30 billion by 2024 at a year-over-year increase of 15.7%.
Moreover, the increasing automation of commercial greenhouses and the implementation of controlled environment agriculture are driving the growth of the smart agriculture industry. Technologies like AI, IoT, machine learning, and robots create promising market growth opportunities. The U.S. smart agriculture market will grow at a CAGR of 10.4% from 2024 to 2030.
Besides, the AI market in the agriculture industry is expected to grow to $5.76 billion by 2029, expanding at a CAGR of 22.5% during the forecast period (2024-2029). Innovations influencing this growth include driverless tractors, which can steer automatically using GPS-based technology, and maximized crop yield using AI/machine learning techniques.
Considering the encouraging economic trends, let’s delve into the fundamentals of the top three Agriculture stocks, beginning with the third choice.
Stock #3: Nutrien Ltd. (NTR)
Headquartered in Saskatoon, Canada, NTR provides crop inputs and services. The company operates through four segments: Retail; Potash; Nitrogen; and Phosphate. It distributes crop nutrients, crop protection products, seeds, and merchandise products and offers granular and standard potash products.
On May 8, NTR’s Board of Directors declared a quarterly dividend of $0.54 per share payable on July 19, 2024, to shareholders of record on June 28, 2024.
NTR pays an annual dividend of $2.16, which translates to a yield of 3.87% at the current share price. Its four-year average dividend yield is 3.18%. Moreover, the company’s dividend payouts have increased at a CAGR of 5.6% over the past three years. NTR has raised its dividends for five consecutive years.
In terms of forward EV/EBITDA, NTR is trading at 7.30x, 14.7% lower than the industry average of 8.56x. Likewise, the stock’s forward Price/Sales multiple of 1.03 is 23% lower than the 1.34 industry average. Also, its forward EV/Sales of 1.52x is considerably lower than the industry average of 1.70x.
During the first quarter that ended March 31, 2024, NTR reported sales of $5.39 billion. Its net earnings were $165 million, or $0.32 per share, respectively. In addition, the company’s adjusted EBITDA came in at $1.05 billion for the quarter. As of March 31, 2024, its cash and cash equivalents were $496 million.
The company expects retail adjusted EBITDA between $1.65 billion and $1.85 billion for the full year.
Analysts expect NTR’s revenue and EPS for the third quarter (ending September 2024) to grow 1% and 68.1% year-over-year to $5.42 billion and $0.59, respectively. For the fiscal year 2025, the company’s revenue is expected to increase 2.6% year-over-year to $27.47 billion, while its EPS is expected to grow 8.6% year-over-year to $4.26.
Shares of NTR have surged 4.4% over the past month and 4.6% over the past six months to close the last trading session at $55.87.
NTR’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
NTR has a B grade for Growth. It is ranked #4 out of 27 stocks in the Agriculture industry.
In addition to the POWR Ratings we’ve stated above, we also have NTR ratings for Momentum, Stability, Quality, Value, and Sentiment. Get all NTR ratings here.