However, increased fertilizer prices augur well for the companies in this space. Fertilizer players such as Nutrien Ltd. NTR, CF Industries Holdings, Inc. CF and Yara International ASA YARIY are worth a look, notwithstanding the near-term headwinds.
About the Industry
The Zacks Fertilizers industry comprises producers, distributors and marketers of crop nutrients for the global agriculture industry. Companies in this space offer nutrients such as phosphates (including diammonium phosphate, monoammonium phosphate and phosphoric acid), potash and nitrogen (including urea, ammonia and urea ammonium nitrate) fertilizers. They also provide other nitrogen products to help farmers maximize crop yield. Crop nutrients are essential to drive agricultural productivity and boost the natural fertility of the soil. Demand for these nutrients is being supported by the need to increase the production of grains to address rising food consumption globally. Moreover, the constant need of growers to nourish their crops, replenish nutrients in the soil following a harvest and boost yields to feed a growing global population drives the consumption of fertilizers.
What's Shaping the Future of the Fertilizers Industry?
Elevated Input Costs a Concern: Increased prices of major raw materials pose a headwind to fertilizer companies. Prices of both sulfur and ammonia — key inputs for the production of phosphate — remain elevated. Supply disruptions from Russia amid the war with Ukraine, aggravated by the Middle East conflict, contributed to the rise in prices of both sulfur and ammonia. Plant shutdowns and maintenance also led to a tight supply of these raw materials, which, coupled with strong demand, pushed up their prices. Rising natural gas prices, a key feedstock for nitrogen fertilizer, are also a concern. Natural gas prices have shot up in Europe and Asia due to constrained supply availability. Higher raw material costs have led to an increase in production costs. As such, fertilizer makers are likely to face short-term margin pressure associated with higher input costs.
Reduced Affordability May Dampen Fertilizer Demand: Growers face challenges from still-depressed crop commodity prices and elevated production costs triggered by increased fertilizer prices, higher input and other costs, including fuel. Escalating costs are likely to result in farmers reducing fertilizer applications or switching to less fertilizer-intensive crops, leading to softer demand. Farm income is also projected to decline this year. The U.S. Department of Agriculture expects net farm income to decline 0.7% year over year to $153.4 billion this year. The same is forecast to decline 2.6% after adjusting for inflation. Reduced farm income may lead to a cutback in fertilizer application. Meanwhile, prices of major crops such as corn, soybean and wheat have improved this year from the lows witnessed in recent years, partly due to the Middle East tensions, but they remain well below the multi-year highs reached in 2022.
Higher Fertilizer Prices Augur Well: Prices of phosphate, potash and nitrogen remained depressed in 2023 and 2024 amid oversupply in the market and weak demand, weighing on the profitability of fertilizer companies. On a positive note, strong demand and supply tightness led to an uptick in fertilizer prices in 2025, with phosphate prices seeing a notable increase. Prices were driven by solid agricultural demand in major markets, China’s export restrictions, U.S. tariffs and higher costs of inputs. The upward momentum in fertilizer prices continues this year. Higher prices are expected to drive top-line and margin expansion for companies in this space over the near term.
Zacks Industry Rank Reflects Downbeat Prospects
The Zacks Fertilizers industry is part of the broader Zacks Basic Materials sector. It carries a Zacks Industry Rank #207, which places it in the bottom 16% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates a bleak near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock market performance and valuation picture.
Industry Underperforms S&P 500
The Zacks Fertilizers industry has underperformed the Zacks S&P 500 composite and the broader Zacks Basic Materials sector over the past year.
The industry has lost 52.2% over this period against the S&P 500’s rise of 24.2% and the broader sector’s increase of 20.7%.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month enterprise value-to EBITDA (EV/EBITDA) ratio, which is a commonly used multiple for valuing fertilizer stocks, the industry is currently trading at 8.43X compared with the S&P 500’s 18.75X and the sector’s 12.8X.
In the past five years, the industry has traded as high as 15.54X and as low as 4.55X, with a median of 9.4X, as the chart below shows.
Enterprise Value/EBITDA (EV/EBITDA) Ratio
Enterprise Value/EBITDA (EV/EBITDA) Ratio
3 Fertilizer Stocks to Keep a Close Eye on
Yara International: Norway-based Yara International is a leading global producer and supplier of mineral fertilizers. It has industry-leading experience in ammonia development, production, operations and distribution. A favorable nitrogen demand environment bodes well for YARIY. Cost reductions and actions to strengthen the balance sheet are expected to boost the company’s profitability and cash flows. YARIY also remains focused on rewarding its shareholders by leveraging strong cash flows.
Yara International currently has a Zacks Rank #1 (Strong Buy). It has an expected earnings growth rate of 61.1% for 2026. The Zacks Consensus Estimate for 2026 earnings has moved 6.9% higher over the past 60 days. The company beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed it once. In this timeframe, it delivered an earnings surprise of 63.1%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: YARIY
Nutrien: Canada-based Nutrien is a leading provider of crop inputs and services. The company is benefiting from healthy demand for crop nutrients, backed by supportive global agriculture markets. NTR is seeing strong potash sales volumes and increasing production from its low-cost North American operations to meet rising demand. NTR is also gaining from acquisitions, cost efficiency and increased adoption of its digital platform. The company also continues to expand its footprint in Brazil through acquisitions. Cost and operational efficiency initiatives are also expected to aid its performance. The company has announced several strategic actions to reduce its controllable costs and boost free cash flow.
Nutrien has expected earnings growth of 26.5% for 2026. The consensus estimate for 2026 earnings has been revised 3.2% upward over the past 60 days. Nutrien currently carries a Zacks Rank #3 (Hold).
Price and Consensus: NTR
CF Industries: Illinois-based CF Industries is a leading global manufacturer of nitrogen and hydrogen products for fertilizer, clean energy, emissions reduction and other industrial applications. It is gaining from higher nitrogen fertilizer demand in the major markets such as North America, Brazil and India. CF is seeing higher nitrogen demand for industrial uses in North America. Higher nitrogen prices are also contributing to a boost in CF Industries’ revenues. CF remains committed to boosting shareholders’ value by leveraging strong cash flows. The company is also taking action to de-leverage its balance sheet.
CF Industries, currently with a Zacks Rank #3, has an expected earnings growth rate of 84% for 2026. The consensus estimate for 2026 earnings has been revised 23.8% upward over the past 60 days. CF’s earnings beat the Zacks Consensus Estimate in each of the last four quarters at an average of 11.4%.
Price and Consensus: CF
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CF Industries Holdings, Inc. (CF): Free Stock Analysis Report
Yara International ASA (YARIY): Free Stock Analysis Report
Nutrien Ltd. (NTR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).