Sample Business Studies Paper on Nutrien Ltd.

If you were the CEO of the corporation what would be your recommendations or what would you do different to improve the stock price?

Nutrien is a well-established company within the agricultural sector has done great for itself when it comes to maintaining stock prices. The management at Nutrien has focused on the broad agricultural value chain at their exposure as well as the financial strength and stability.

Well if I were given the position of CEO at Nutrien, I would really focus on the business growth model and put much emphasis on green efficiency. Green efficiency geared toward the modes of energy used in the manufacturing and processing plant and invest in technology that is time and energy-efficient. Green energy efficiency is the way to go moving into the future and am sure this would save a great deal in terms of production expenditure (NUTRIEN INC., 2017). The regulation on production expenditure would definitely have a great impact on the general revenue growth rate meaning an improvement in the stock prices for Nutrient shareholders and potential investors.

Considering the great deep in Nutrien’s stock prices over the last three months, largely contributed by the global pandemic of COVID-19. It would be wise as an investor to also focus on other key financial indicators that could have resulted in such a drop in stock prices. If I were CEO, I would take my time and study the current rate of equity at Nutrien as this would be crucial in focusing at the shareholder’s interest in regards to how well their capital is being reinvested by the company (Mejorado & Roman, 2014).

Basically, return on equity is a profitability ratio that measures the rate of return on the capital invested by shareholders at any given time. A critical analysis of Nutrien’s return on equity will reveal that the company is paying its shareholders more than its earnings a factor that management needs to focus on. I would suggest that such payout in dividends to shareholders, in the long run, will be detrimental to the company’s finances and concentrate on reinvesting that capital into the company (NUTRIEN INC., 2017).

 

 

Use the Gordon Growth Model to calculate the true value of the stock. Comment on the results

Players in the stock’s investment field are always devising new strategies to evaluate the worthwhileness of different stock before making any moves into buying or selling stocks. The risk involved while trading in stocks is quite high and calculated moves need to be inculcated before making a move. This is where Gordon’s Growth Model comes in while evaluating the real market value of a share versus the speculations involved (Gürak, 2015).

Gordon’s Growth Model generally uses dividend growth and the rate of return to determine the value of a company’s stock. The growth model makes assumptions that the company’s business model is stable and that growth is constant. The stock price is equal to the expected value of the dividend divided by the difference between the investor’s rate of return minus the constant growth rate of return (Mejorado & Roman, 2014).

 

Where:

P is the current stock price

g is the constant growth rate expected for dividends = -10.8%

r is the required rate of return for equity investors = 5.8%

D1 is the expected divided by share one year from now =5.5 %

=33.13 $

 

This means that the model put the intrinsic value of Nutrien at 33.13$ which is $21.75 less than the current market value of the stock. The interpretation of this is that the stock price for Nutrien has been overvalued and is a sell for any serious investors looking to invest in a fintech company (Sander & Bobo, 2019). The reason behind this could be the high uptake of genetically modified foods by consumers who are slowly moving away from organic foods.

 

ReferenceTop of FormTop of Form

Gürak, H. (2015). Economic growth and development:

              Theories, criticisms and an alternative growth model.Bottom of Form

Top of FormMejorado, A., & Roman, M. (2014). Profitability and the great recession:

The role of accumulation trends in the financial crisis.Bottom of Form

NUTRIEN INC. (February 24, 2017). NUTRIEN INC. –

ANNUAL REPORT – DECEMBER 31, 2016. ReportalBottom of Form

Top of FormSander, P. J., & Bobo, S. (2019). The 100 best stocks to buy in 2020.

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