NTR
Nutrien Ltd.
$69.74
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 54.9% above fair value
You pay
$69.74
Bear
$33.18
Fair
$45.03
Bull
$56.88
Bear
$33.18
-52.4%
$4.74 × 7x
Fair
$45.03
-35.4%
$4.74 × 10x
Bull
$56.88
-18.4%
$4.74 × 12x
Adjust Assumptions
9.5x
4.74$
Key Value Driver
Through-cycle normalized EPS ($4.74)
Implied Market Multiple
14.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (33 analysts)
$77.29
Divergence from AlphaVal
42%
Summary
Using 7-year normalized EPS of $4.74 at a 10x cycle multiple, the base-case value is $45.03 per share. P/TBV cross-check: 2.9x.
Warnings
This company has a built-in lending arm whose debt is mixed in with the main business. We capped the debt adjustment to avoid overstating what the core business owes.
Price-to-book value of 2.9x is above the normal range for this type of business (0.7x-2.0x). The stock may already price in a strong cycle.
Wall Street's average price target is $77.29 (from 33 analysts). Our estimate is 42% below the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing