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CF Industries missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters while beating it once. The company delivered a trailing four-quarter negative earnings surprise of 4.6%, on average. CF’s second-quarter results are likely to reflect the impacts of softer nitrogen prices. However, it is expected to have benefited from healthy nitrogen fertilizer demand in major markets and lower natural gas costs.
Shares of CF Industries have declined 9.5% in the past year compared with a 29.7% decline of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $1,580.2 million, which indicates a roughly 11% decline year over year.
Our estimate for total sales in the Ammonia segment is currently pegged at $430.1 million, indicating an 18.1% decline on a year-over-year basis. The same for the Granular Urea segment is $454.4 million, which suggests a decrease of 1.2%.
Our estimate for sales of the Urea Ammonium Nitrate Solution segment currently stands at $508.2 million, which suggests a decline of 7.3% year over year.
Our estimate for total sales of the Ammonium Nitrate segment is $94.7 million, which indicates a decline of 8.9% year over year.
Factors at Play in Q2
CF Industries is expected to have benefited from higher global demand for nitrogen fertilizers, being driven by strong agricultural demand. Demand for nitrogen is likely to have remained healthy in the second quarter on the back of recovering industrial demand and favorable farm economics. Additionally, lower natural gas prices are expected to have led to a decline in the company's cost of sales in the quarter to be reported.
However, softer nitrogen prices are likely to have been a challenge for CF Industries. Global nitrogen prices have declined since the beginning of 2023. Higher global supply availability driven by higher global operating rates due to lower global energy costs has resulted in a decline in prices. Lower average selling prices weighed on CF's top line in the first quarter. The weak pricing environment is likely to have also persisted in the second quarter. Lower pricing is expected to have hurt CF’s sales and margins.
CF Industries Holdings, Inc. Price and EPS Surprise
Our proven model does not conclusively predict an earnings beat for CF Industries this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for CF Industries is -4.18%. The Zacks Consensus Estimate for the second quarter stands at $1.87. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Image: Bigstock
CF Industries (CF) to Report Q2 Earnings: What's in the Offing?
CF Industries Holdings, Inc. (CF - Free Report) is set to release second-quarter 2024 results after the closing bell on Aug 7.
CF Industries missed the Zacks Consensus Estimate for earnings in three of the trailing four quarters while beating it once. The company delivered a trailing four-quarter negative earnings surprise of 4.6%, on average. CF’s second-quarter results are likely to reflect the impacts of softer nitrogen prices. However, it is expected to have benefited from healthy nitrogen fertilizer demand in major markets and lower natural gas costs.
Shares of CF Industries have declined 9.5% in the past year compared with a 29.7% decline of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $1,580.2 million, which indicates a roughly 11% decline year over year.
Our estimate for total sales in the Ammonia segment is currently pegged at $430.1 million, indicating an 18.1% decline on a year-over-year basis. The same for the Granular Urea segment is $454.4 million, which suggests a decrease of 1.2%.
Our estimate for sales of the Urea Ammonium Nitrate Solution segment currently stands at $508.2 million, which suggests a decline of 7.3% year over year.
Our estimate for total sales of the Ammonium Nitrate segment is $94.7 million, which indicates a decline of 8.9% year over year.
Factors at Play in Q2
CF Industries is expected to have benefited from higher global demand for nitrogen fertilizers, being driven by strong agricultural demand. Demand for nitrogen is likely to have remained healthy in the second quarter on the back of recovering industrial demand and favorable farm economics. Additionally, lower natural gas prices are expected to have led to a decline in the company's cost of sales in the quarter to be reported.
However, softer nitrogen prices are likely to have been a challenge for CF Industries. Global nitrogen prices have declined since the beginning of 2023. Higher global supply availability driven by higher global operating rates due to lower global energy costs has resulted in a decline in prices. Lower average selling prices weighed on CF's top line in the first quarter. The weak pricing environment is likely to have also persisted in the second quarter. Lower pricing is expected to have hurt CF’s sales and margins.
CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote
Zacks Model
Our proven model does not conclusively predict an earnings beat for CF Industries this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.
Earnings ESP: Earnings ESP for CF Industries is -4.18%. The Zacks Consensus Estimate for the second quarter stands at $1.87. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries currently carries a Zacks Rank #4 (Sell).
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Barrick Gold Corporation (GOLD - Free Report) , scheduled to release earnings on Aug 12, has an Earnings ESP of +3.29% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for GOLD’s earnings for the second quarter is currently pegged at 26 cents.
Hudbay Minerals Inc. (HBM - Free Report) , slated to release earnings on Aug 13, has an Earnings ESP of +1.12% and carries a Zacks Rank #3 at present.
The consensus mark for HBM’s second-quarter earnings is currently pegged at 6 cents.
Nutrien Ltd. (NTR - Free Report) , scheduled to release second-quarter earnings on Aug 7, has an Earnings ESP of +1.34%.
The Zacks Consensus Estimate for NTR’s earnings for the second quarter is currently pegged at $2.13. NTR currently carries a Zacks Rank #3.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.