Common Stock: Nutriplant (NUTR3)
Current Market Price: R$ 229.00
Market Capitalization: R$ 29.3 million
*All values in this article are expressed in Brazilian Reais (BRL) unless otherwise noted.
**The bulk of this analysis is based on the company’s most recent audited financial report, which can be found by following this link.
Nutriplant Stock – Summary of the Company
Nutriplant is a Brazilian specialty fertilizer manufacturer. They produce micronutrients and fertilizers designed to increase crop production and improve animal nutrition. The company has over 100 products in its portfolio and continues to develop new products through partnerships with universities and agriculture centers. Nutriplant was founded in 1980 and is headquartered in Sao Paulo, Brazil.
Revenue and Cost Analysis
Nutriplant had total revenue of R$ 63.4 million in 2019, an increase from R$ 51 million in 2018. Their COGS was R$ 52.3 million, representing a gross margin of 17%, a decrease from 18% and 24% in 2018 and 2017 respectively.
Nutriplant showed an accounting profit in 2019 after net losses in both 2018 and 2017. Net income in 2019 was R$ 34.4 million, compared to a loss of R$ 2.7 million in 2018 and R$ 9.4 million in 2017. This increase in net income is due almost entirely to financial revenue. This revenue was a one-time realization of a credit from the company’s creditors related to the company’s past bankruptcy proceedings. This was not positive cash flow. So although the company showed accounting net income in 2019, without this credit they would have had a net loss.
Balance Sheet Analysis
Nutriplant has emerged from bankruptcy proceeding with an improved, but still weak balance sheet. The company is significantly leveraged and has a sufficient but not strong liquidity position.
Nutriplant – Debt Analysis
As of year-end 2019 Nutriplant has total debt outstanding of R$ 12 million, R$ 3.5 million of which is classified as current.
Nutriplant Stock – Share Dynamics and Capital Structure
As of year-end 2019 Nutriplant has 127,944 common shares outstanding. One holding company owns around 75% of the company’s outstanding shares, with the remaining 25% being held by smaller shareholders with less than a 5% ownership stake.
Nutriplant Stock – Dividends
The company does not currently pay a dividend.
Nutriplant Stock – 3 Metrics to Consider
Debt to Equity Ratio
Total Liabilities/Total Share Holder Equity
R$ 45.5 million / R$ 12.8 million = 3.5
A debt to equity ratio of 3.5 indicates that Nutriplant uses a lot of leverage in its capital structure and relies heavily on debt financing to find itself.
Working Capital Ratio
Current Assets/Current Liabilities
R$ 28.8 million / R$ 17.9 million = 1.6
A working capital ratio of 1.6 indicates a sufficient but not strong liquidity position. Nutriplant should not have a problem meeting its near term obligations.
Price to Book Ratio
Current Share Price/Book Value per Share.
R$ 229 / R$ 100.29 = 2.2
Nutriplant has a book value per share of R$ 100.29. At the current market price this implies a price to book ratio of 2.2, meaning Nutriplant stock currently trades at a premium to the book value of the company.
Brazilian Agriculture Market – Economic Factors and Competitive Landscape
Brazil is an agricultural powerhouse, it ranks 5th in the world in terms of arable land. Agriculture is a large and important industry for the Brazilian economy. Brazil is the world’s largest producer of oranges, sugarcane, and coffee. They also compete globally in the production of soy, meat, and corn. Brazils’ diverse geography allows it to produce a wide variety of crops.
Global agricultural is a highly competitive market subject to large swings in global commodity prices. Brazilian agricultural companies will have to compete fiercely on a global stage for exports. However, given the scale of the industry in Brazil, I believe it is reasonable to assume that there are many well run, investable agriculture companies in Brazil.
Nutriplant Stock – Summary and Conclusions
Nutriplant stock has increased around 1000% since its low of R$ 26 per share in April 2020. I don’t know who is buying this or why. The company shows 2019 net income that exceeds its current market capitalization. However this is due to an accounting credit and not positive cashflow. The company is still in a weak position financially and its operating results have been poor.
Although the company is decent and appears to be making improvements post-bankruptcy, chasing its stock after a 1000% increase would we a terrible investment decision. If I wanted to allocate to a Brazilian agriculture company, there are much more reasonably priced companies, such as Brasil Agro.
Disclaimer
This is not investment advice. Nothing in this analysis should be construed as a recommendation to buy, sell, or otherwise take action related to the security discussed. If I own a position in the security discussed, I will clearly state it.
This is not intended to be a comprehensive analysis and you should not make an investment decision based solely on the information in this analysis. I hope this serves as a useful starting point for a more comprehensive analysis, and hopefully draws attention to aspects of the company that were overlooked or merit further investigation. This is by no means intended to be a complete analysis. Again, this is not investment advice, do your own research.
