NTR
Nutrien Ltd.
$70.13
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Overvalued
Trading 48.6% above fair value
You pay
$70.13
Bear
$29.04
Fair
$47.19
Bull
$65.34
Bear
$29.04
-58.6%
$4.74 × 7x + net cash
Fair
$47.19
-32.7%
$4.74 × 10x + net cash
Bull
$65.34
-6.8%
$4.74 × 12x + net cash
Key Value Driver
Through-cycle normalized EPS ($4.74)
Implied Market Multiple
14.8x
Summary
Our base-case estimate uses Normalized Earnings × Cycle Multiple. We then blend that result with the average analyst price target of $85.40 from 33 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $47.19 per share.
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 $85.40 (from 33 analysts). Our estimate is 64% 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