Is Now the Time to Look at Nutrien Shares After 6.8% Weekly Gain?

Thinking about what to do with Nutrien shares? You are not alone. Lately, there has been a lot more conversation around this fertility giant, especially with the way it has turned heads in the market. Imagine this: in the past week alone, the stock jumped 6.8%. Looking at the bigger picture, it is up 29.2% year-to-date and a hefty 89.9% over five years. True, there have been some bumps along the way; the three-year return is still in the red, but the recent momentum paints a compelling picture.

A lot of this movement tracks with global market developments tied to agriculture and food prices, as investors recalibrate their expectations and risk appetite when it comes to fertilizer and crop input companies like Nutrien. This shifting landscape means perceptions about growth potential and risk are changing, and Nutrien seems to be reaping the benefits. When it comes to value, things get even more interesting. According to our scorecard, Nutrien is currently undervalued in four out of six major checks, landing a value score of 4. That is a pretty strong showing and sets the stage for a deeper dive into its valuation.

So, should you view Nutrien as a bargain, or is there more to the story than meets the eye? Let’s walk through some of the key valuation approaches. Stick around, because at the end, we will cover a smarter, more holistic way to judge whether Nutrien deserves a spot in your portfolio.

Why Nutrien is lagging behind its peers

Approach 1: Nutrien Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is truly worth by forecasting its future cash flows and discounting them back to present-day value. For Nutrien, this approach focuses on its Free Cash Flow (FCF), measuring what is left after maintaining and growing operations, and uses that as the core value driver.

Currently, Nutrien’s latest twelve months of Free Cash Flow stands at $1.53 billion. Over the next decade, analysts project FCF peaking at $2 billion by 2029. Only the first five years rely on external analyst estimates, while further years are extrapolated by Simply Wall St. These projections reflect not just optimism about Nutrien’s earning power, but also the importance of the global food and agriculture market to its future performance.

The end result is that the DCF model pegs Nutrien’s intrinsic value at $102.93 per share. This price point is about 18.1% higher than the current trading price, which suggests Nutrien stock is undervalued based on this long-term cash flow assessment.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Nutrien.

Our Discounted Cash Flow (DCF) analysis suggests Nutrien is undervalued by 18.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Nutrien Price vs Earnings (PE)

For profitable companies like Nutrien, the Price-to-Earnings (PE) ratio is often the go-to metric for valuation. It tells investors how many dollars they are paying for every dollar of earnings, making it useful for assessing whether the stock price reflects the company’s real earning power.

What counts as a “normal” PE ratio depends on several factors. Companies with robust earnings growth or lower risk profiles often command higher PE multiples, while slower-growth or more volatile companies usually trade at lower ones. Risk and growth expectations set the standard for what is fair.

Nutrien’s current PE ratio sits at 21.5x. To put that into context, key benchmarks like the broader Chemicals industry average PE ratio is 22.6x, and the average among Nutrien’s peers is an elevated 73.3x. Nutrien therefore trades below the average of its closest competitors and slightly under the sector’s typical PE.

This brings us to the Simply Wall St “Fair Ratio.” This proprietary benchmark suggests the PE ratio that would be justified for Nutrien based on its earnings growth, profit margins, market capitalization, industry dynamics, and risk profile, rather than just comparing against a broad average. Relying on the Fair Ratio offers a more objective and tailored guideline for valuation.

Nutrien’s Fair Ratio is 22.6x, only just above its actual current PE of 21.5x. This close alignment signals that, accounting for the nuances in growth and risk, the stock is pretty much fairly valued based on earnings right now.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Nutrien Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. Narratives are simple, powerful stories that investors create to capture their unique perspective on a company. They link what they believe will happen to Nutrien’s future revenue, profit margins, and fair value, all based on the numbers.

With Narratives, you are not just looking at data in isolation; you are weaving together Nutrien’s business story, your assumptions for how its future will unfold, and the fair value that results. This approach turns valuation into an accessible, dynamic tool that is available to everyone within the Simply Wall St Community page, used by millions of investors worldwide.

Narratives help you make smarter buy or sell decisions by constantly updating fair value estimates as markets shift and as new news or earnings emerge. For example, one investor might be upbeat on Nutrien, forecasting strong industry growth and setting a fair value near CA$96.39, while another could focus on regulatory headwinds and be more cautious with a CA$61.11 target.

By exploring Narratives, you can map your investment thesis to the market, compare it to others, and act with greater conviction when deciding if Nutrien belongs in your portfolio.

Do you think there's more to the story for Nutrien? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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