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Why Is Nutrien (NTR) Down 3.5% Since Last Earnings Report?

A month has gone by since the last earnings report for Nutrien (NTR). Shares have lost about 3.5% in that time frame, underperforming the S&P 500.

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

Nutrien's Q3 Earnings and Revenues Miss Estimates

Nutrien recorded third-quarter 2023 profits of $82 million or 15 cents per share, down from $1,583 million or $2.94 in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 35 cents. The bottom line missed the Zacks Consensus Estimate of 71 cents.

Sales plunged around 31% year over year to $5,631 million in the quarter. The figure lagged the Zacks Consensus Estimate of $5,680.4 million.

The company's financial performance was impacted by lower net realized selling prices across all business segments and decreased earnings from the Retail unit.

Segment Highlights

Sales in the Nutrien Ag Solutions (Retail) segment declined 12% year over year to $3,490 million in the quarter. The decline in the third quarter was primarily due to a 22% fall in crop nutrient sales on lower selling prices across all regions compared with the strong periods in 2022. The figure was higher than our estimate of $3,273.5 million.

Potash division’s sales declined 51% year over year to $972 million, lower than our estimate of $1,195.3 million.  The third quarter witnessed the highest sales volumes ever recorded, primarily fueled by robust demand in North America and Brazil. Offshore sales volumes saw a decline during the same period due to logistical difficulties at Canpotex's West Coast port facilities and reduced shipments to customers in India and Southeast Asia. This decline was partially offset by record sales volumes of Canpotex to Brazil.

Sales in the Nitrogen segment were $659 million, down around 57% year over year. The decline was due to lower net realized selling price in the third quarter for all major nitrogen products, which more than offset lower natural gas costs. The reported figure is lower than our estimate of $1,184.4 million.

Sales in the Phosphate segment were $382 million, down around 33% year over year, affected by the decrease in net realized selling price for fertilizer products, partially offset by lower ammonia and sulfur input costs. The figure was higher than our estimate of $274 million.

Financials

At the end of the quarter, Nutrien had cash and cash equivalents of $554 million, down around 32.7% year over year. Long-term debt was $9,427 million, up roughly 34.3% year over year.

Cash used by operating activities was $469 million in the reported quarter.

Guidance

The company now expects adjusted EBITDA of $5.8-$6.4 billion for full year 2023. Adjusted EPS has been forecast in the band of $4.15-$5.00 per share. Nutrien expects cash provided by operations of $4-$4.5 billionand capital expenditures of about $2.7 billion.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -7.44% due to these changes.

VGM Scores

Currently, Nutrien has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. 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 this revision 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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