Agrium Inc.AGU

Morningstar Rating

Stock Research and Analysis

by Ben Johnson

From fertilizer manufacturing to retail seed sales, Agrium is well-positioned to capture value throughout the entire agricultural input chain.

Agrium is North America's largest retail distributor of agricultural inputs. Having recently acquired UAP Holding Corp. Read more

Bulls Say

Agrium has a solid track record as an acquisitor. For example, the firm quickly exceeded its initial synergy targets for its 2006 Royster Clark acquisition, and we expect this acquisition will ultimately be accretive to the firm's returns on invested capital. We expect a similarly smooth transition as the firm folds in UAP's operations.

Agrium recently acquired a 19.6% equity position in Chinese specialty fertilizer producer Hanfeng Evergreen Inc. The firm is a leading producer of controlled-release fertilizers in the world's largest fertilizer market.

Agrium recently reached a final agreement with the Egyptian government that will allow it to establish a low-cost nitrogen presence within the country. This came after its initially proposed project fell through as a result of strong government opposition. Read more

Bears Say

Agrium could be biting off more than it can chew with its bid for CF Industries CF. Having just tacked on some debt to finance its acquisition of UAP and with most of its key markets presently at a standstill, the timing of the firm's bid may be less than perfect.

Nitrogen fertilizer production is inherently volatile as the vast majority of cash production costs are linked to natural gas prices. Read more

Strategy

Agrium's unsolicited bid for CF highlights the firm's ambitions to get bigger in the North American wholesale fertilizer production and distribution business. Whether this bid is successful or not, we expect that Agrium will continue to be an active acquirer in both its wholesale and retail businesses. Read more

Management

Michael Wilson joined Agrium in 2000 as COO and was named CEO in 2003. Before joining Agrium, Wilson served as a senior officer of various public chemical companies, including Methanex MEOH and Dow Chemical DOW. We are impressed by the level of disclosure Agrium provides in its quarterly and annual reports. Read more

Profile

Agrium is a combination agricultural distributor and fertilizer producer. Agrium's retail division has nearly 900 global facilities and is North America's largest retail provider of agricultural products and services. Read more

First Name

Last Name

Email Address

Zip Code

Create Password

Verify Password

(6-15 characters; case sensitive)

What is your occupation or job title?

Select...

Your registration indicates agreement to the terms of use.

Growth Stocks in Secular Upcycles
Watch more