Having discussed the earnings and EBITDA (earnings before interest, tax, depreciation, and amortization) expectations for fertilizer companies (XLB) in the earlier parts of this series, we’ll now look at these companies’ valuation multiples and how they stack up.
The above chart shows the forward PE (price-to-earnings) multiple of the four companies. The median PE multiple stood at 17.5x. Israel Chemicals (ICL) had a forward PE multiple of 14.2x as of August 27. Compared to the other three companies, ICL’s PE seems to be trading at a discount. However, when compared with the company’s levels since 2013, the current PE seems to be in “overbought” territory.
Mosaic (MOS) was trading at a forward PE of 15.8x, a discount compared to the peer average of 17.5x. However, compared to its range of 9x to 37x since 2013, the company’s PE is closer to the lower end of the range.
Nutrien (NTR), on the other hand, was trading at a forward PE of 19.3x, which was a premium to the peer median. CF Industries (CF) was also trading at a premium to the peer median of 17.5x at 28.2x as of August 27. Since Nutrien was just listed in 2018, we can’t compare past periods with Mosaic and Israel Chemicals. As for CF Industries, it had negative earnings per share, which means we can’t compare its current PE to its historical levels.