Nutrien Ltd. NTR is benefiting from healthy demand for crop nutrients, its actions to reduce costs and strategic acquisitions. Higher fertilizer prices are providing further support. However, exposure to volatile input costs and supply tightness could pressure margins.
The NTR stock has gained 13.8% over the past year, compared with the Zacks Fertilizers industry’s 3.8% rise.
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Let’s find out why NTR stock is worth retaining at the moment.
Healthy Demand, Higher Prices & Cost Cuts Aid NTR Stock
Nutrien is well-placed to benefit from higher demand for fertilizers, backed by the strength in global agriculture markets. It is seeing healthy fertilizer demand in its major markets. Tight inventories are expected to support crop commodity prices.
Favorable farmer economics, improved affordability and low inventory levels are expected to drive potash demand globally. The phosphate market is also supported by low producer and channel inventories. Restricted exports from China have also led to supply tightness in this market. Demand for nitrogen fertilizer also remains healthy in major markets. Global nitrogen requirement is driven by demand in North America, India and Brazil. A resurgence in industrial nitrogen demand also bodes well. Expectations of high levels of planted corn and soybean acres globally also suggest a pickup in fertilizer demand in 2026.
NTR saw record potash sales volumes in the first quarter of 2026, driven by low inventory levels and favorable potash affordability, especially in key offshore markets. The company maintained its global potash shipment forecast of 74-77 million tons for 2026 and sees relatively tight potash fundamentals through the year. It is also increasing production from its low-cost North American operations to meet rising demand.
Strong demand and supply tightness have led to an uptick in fertilizer prices, with phosphate prices seeing a notable increase. Prices are driven by solid agricultural demand in major markets, China’s export restrictions, U.S. tariffs and higher costs of inputs. Higher prices are expected to drive top-line and margin expansion for NTR over the near term.
NTR should also gain from acquisitions and increased adoption of its digital platform. It continues to expand its footprint in Brazil through acquisitions. It is expected to continue pursuing targeted opportunities in its core markets. The company expects to utilize part of its free cash flow for incremental growth investments, including tuck-in acquisitions in the retail business.
Cost and operational efficiency initiatives are also expected to aid the company’s performance. NTR remains focused on lowering the cost of production in the potash business. It has announced several strategic actions to reduce its controllable costs and boost free cash flow. It surpassed the $200 million annual cost savings target for 2025, achieving it a year earlier than its initial target. It expects sustained cost-reduction efforts across all geographies to aid margin improvement in 2026.
Input Cost Inflation May Pressure NTR's Margins
NTR remains exposed to a volatile input cost environment amid supply tightness. Nutrien uses sulfur, ammonia and natural gas as key inputs. Supply disruptions from Russia amid the war with Ukraine, exacerbated by the Middle East conflict, contributed to the rise in input prices. Plant shutdowns and maintenance also resulted in a tight supply of these inputs, which, coupled with strong demand, pushed up their prices. Tight global sulfur supply, higher benchmark sulfur prices and ongoing supply-chain constraints continued to increase phosphate production costs.
The company saw higher sulfur input costs in the first quarter, leading to a higher cost of goods sold per ton in the phosphate businesses, hurting margins. It expects further pressure on phosphate margins in the second quarter, resulting from higher sulfur and ammonia costs.
Nutrien Ltd. Price and Consensus
Nutrien Ltd. price-consensus-chart | Nutrien Ltd. Quote
NTR’s Zacks Rank & Other Key Picks
NTR currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space are Nucor Corporation NUE, L.B. Foster Company FSTR and Albemarle Corporation ALB, each carrying a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nucor’s current-year earnings stands at $14.84 per share, implying an 92.5% year-over-year increase. NUE’s earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with an average surprise of 8.1%.
The consensus estimate for L.B. Foster’s current-year earnings is pegged at $1.74 per share, implying a 152.2% year-over-year increase. The Zacks Consensus Estimate for FSTR’s current-year earnings has been revised 12.3% higher over the past 60 days.
The Zacks Consensus Estimate for Albemarle’s current-year earnings is pegged at $12.39 per share, indicating a 1,668.4% year-over-year increase. ALB’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed once, with an average surprise of 54.1%.
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Nucor Corporation (NUE): Free Stock Analysis Report
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L.B. Foster Company (FSTR): Free Stock Analysis Report
Nutrien Ltd. (NTR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).