uploads/2018/08/2-Comparing-Valuation-Multiples-of-Fertilizer-Stocks-2018-08-27-1.jpg

ICL, MOS, CF, NTR: A Look at Valuation Multiples

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Forward EV-to-EBITDA multiple

In this part, we’ll continue our discussion with a review of forward EV-to-EBITDA (enterprise value to earnings before interest tax depreciation, and amortization) of the four fertilizer companies (MOO) we reviewed in the previous parts of this series.

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Where do they stand?

The median forward EV-to-EBITDA multiple of the four companies in the above chart stood at 9.7x as of August 27. Once again, Israel Chemicals (ICL) and Mosaic (MOS) are trading at a discount to the peer median. Israel Chemicals’ forward multiple stood at 8.5x, while Mosaic was trading at a forward multiple of 7.8x as of August 27.

Once again, Israel Chemicals was trading close to the higher end of its historical range of 5.5x to 9.4x since 2013. On the other hand, Mosaic was trading closer to the lower end of its range of 5x to 12.5x since 2013.

Nutrien (NTR) was trading at a forward multiple of 10.9x, and CF Industries (CF) was trading at a forward multiple of 11.4x. Both these stocks were trading at a premium to the peer median, which is similar to what we saw for the forward PE in the earlier part of this series.

Since 2013, CF Industries traded between the range of 3.0x to 13.5x, and its current level is closer to the upper end of this range. Since Nutrien just started trading in 2018, we don’t have data for the comparable period.

We’ll wrap up this series with a discussion on analysts’ recommendations and price target for these four stocks next.

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