Does the Recent 29% Rally in Nutrien Signal a True Value Opportunity for 2025?

• Curious if Nutrien’s stock lives up to the hype or if it is just experiencing a temporary surge? Let’s explore whether today’s price offers real value.
• Shares have been rising recently, gaining 5.2% in the past week and 10.3% over the last month. This has contributed to a year-to-date increase of 29.1%.
• Market attention increased after Nutrien made moves to streamline operations and focus on its most profitable business segments, along with growing demand for fertilizers in global agriculture. These developments have prompted investors to reconsider the company’s long-term growth prospects, leading to renewed optimism.
• Our initial assessment is that Nutrien scores a 5 out of 6 on our valuation checklist, suggesting strong value. Next, we’ll explain how that score is determined, and by the end of the article, you’ll have a more informed approach to evaluating Nutrien’s true worth.

Find out why Nutrien's 28.0% return over the last year is lagging behind its peers.

Approach 1: Nutrien Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and discounting them back to today’s dollars. This approach aims to determine what Nutrien is truly worth, based on its ability to generate cash over time, rather than relying solely on current market sentiment.

For Nutrien, the DCF model uses a 2 Stage Free Cash Flow to Equity method. The company recently reported Free Cash Flow of $1.93 Billion, and analysts forecast that annual cash flow will grow, reaching $2.23 Billion by 2029. Beyond the five years of analyst coverage, projections are extended using industry-standard methods to build a ten-year outlook. All figures are in US dollars.

The output of this DCF analysis estimates Nutrien’s intrinsic value at $117.64 per share. Comparing this to the current share price, the model suggests that Nutrien is trading at a 28.4% discount.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Nutrien is undervalued by 28.4%. Track this in your watchlist or portfolio, or discover 928 more undervalued stocks based on cash flows.

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

Approach 2: Nutrien Price vs Earnings

The Price-to-Earnings (PE) ratio is a widely used metric for valuing profitable companies, as it reflects what investors are willing to pay today for each dollar of earnings the company generates. For firms like Nutrien, which produce consistent earnings, the PE ratio offers a clear, direct lens for price evaluation.

Market growth expectations and perceived business risks heavily influence what is considered a "normal" or "fair" PE ratio. Companies with better long-term prospects or lower risk typically deserve higher PE multiples, while those facing uncertainty or slow growth usually trade at lower ratios.

Nutrien currently trades at a PE ratio of 16.1x. For context, the average PE ratio across the Chemicals industry is 21.0x, and Nutrien's peer group averages 22.5x. On the surface, this places the stock at a noticeable discount relative to these benchmarks.

To go deeper, we introduce the Simply Wall St "Fair Ratio." This is a proprietary metric that estimates what Nutrien's PE should be, considering its unique combination of growth trends, industry, profitability, market capitalization, and risk factors. The Fair Ratio for Nutrien is calculated at 18.2x, making it a more tailored benchmark than simply referencing industry or peer averages, which may not capture the company's specific strengths or challenges.

Comparing the current PE of 16.1x to the Fair Ratio of 18.2x suggests that Nutrien is trading below what would be considered a fair valuation for its profile. This points toward the stock being undervalued based on this approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1441 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Nutrien Narrative

Earlier we mentioned there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is your personal story about a company, where you bring together what you believe about Nutrien's future, such as its likely revenue, earnings, and margins, and translate that into a fair value.

Rather than just focusing on static numbers or analyst consensus, Narratives enable you to connect the company's story, like its growth catalysts, risks, or unique strengths, directly to a financial forecast and fair value. This approach helps you see not just what Nutrien is worth, but why you think it's worth that much, grounding your decision in both numbers and business reality.

On Simply Wall St’s Community page, Narratives are simple and accessible tools used by millions of investors. Whenever new information emerges, whether it's quarterly results or major news, Narratives update dynamically so your valuations can stay current and relevant.

This empowers better buy or sell decisions because you can instantly compare the fair value from your Narrative to the current share price. For example, for Nutrien, some investors forecast robust earnings growth and assign a bullish value close to CA$96.39 per share, while others take a cautious view, expecting headwinds, and use a far lower estimate of CA$61.11. Narratives make these perspectives explicit and actionable, so you can invest smarter with your outlook leading the way.

Do you think there's more to the story for Nutrien? Head over to our Community to see what others are saying!

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.