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CF Industries Holdings, Inc.’s (CF - Free Report) shares have gained 11.2% over the past six months, outperforming the Zacks Fertilizers industry’s decline of 13%. It is well-placed to benefit from higher nitrogen fertilizer demand in major markets and lower natural gas costs.
We are positive about CF’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Let's see what makes CF stock an attractive investment option at the moment.
Image Source: Zacks Investment Research
CF’s Earnings Estimates Northbound
Earnings estimates for CF have been going up over the past 60 days. The Zacks Consensus Estimate for 2024 has increased by 5.9%. The consensus estimate for the fourth quarter of 2024 has also been revised 1.9% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Superior Return on Equity (ROE) for CF Stock
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for CF Industries is 14.6%, above the industry’s level of 8%.
CF’s Stock Valuation Looks Attractive
CF’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential. Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value fertilizer stocks, CF is currently trading at a trailing 12-month EV/EBITDA multiple of 6.79, cheaper compared with the industry average of 10.45.
CF Stock Gains on Healthy Nitrogen Demand, Lower Gas Costs
CF Industries is benefiting from the rising global demand for nitrogen fertilizers, which is driven by significant agricultural demand. Industrial demand for nitrogen has also recovered from the pandemic-related disruptions. Global demand is expected to remain strong in the near future due to recovering industrial demand and farmer economics.
High levels of corn planted acres and low nitrogen channel inventories are expected to drive demand for nitrogen in North America. Demand for urea is also likely to remain strong in Brazil on higher corn acres. Demand in India is expected to be driven by favorable weather conditions for crop production.
Strong global nitrogen demand and reduced supply availability supported global nitrogen prices in the third quarter of 2024. CF, on its third-quarter call, said that it anticipates the global supply-demand balance to remain constructive, as inventories are believed to be below average globally while energy spreads remain significant between North America and high-cost production in Europe.
The company also stands to benefit from lower natural gas prices. It saw a decline in natural gas costs in the third quarter. The average cost of natural gas fell to $2.10 per MMBtu in the quarter from $2.54 per MMBtu in the year-ago quarter. The benefits of reduced gas costs are expected to continue in the fourth quarter.
CF remains committed to boosting shareholders’ value by leveraging strong cash flows. The company repurchased 14.4 million shares for $1.13 billion in the first nine months of 2024, including 6.1 million shares for $476 million in the third quarter. The current $3 billion share repurchase program had around $1.45 billion remaining at the end of the third quarter. Earlier this year, the company also announced a 25% increase in quarterly dividend to 50 cents per share.
The Zacks Consensus Estimate for IAMGOLD’s current-year earnings has increased by 24.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 203.4%. Its shares have shot up roughly 128% in the past year.
The Zacks Consensus Estimate for Axalta Coating’s current year earnings is pegged at $2.15, indicating a rise of 36.9% from year-ago levels. The Zacks Consensus Estimate for AXTA’s current year earnings has increased 3.9% in the past 60 days. The stock has rallied around 29% in the past year.
Ingevity beat the consensus estimate in three of the last four quarters while missed once. In this timeframe, it delivered an earnings surprise of 95.4%, on average. NGVT’s shares have gained roughly 15% in the past year.
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Here's What Makes CF Industries Stock a Solid Choice Right Now
Key Takeaways
CF Industries Holdings, Inc.’s (CF - Free Report) shares have gained 11.2% over the past six months, outperforming the Zacks Fertilizers industry’s decline of 13%. It is well-placed to benefit from higher nitrogen fertilizer demand in major markets and lower natural gas costs.
We are positive about CF’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Let's see what makes CF stock an attractive investment option at the moment.
CF’s Earnings Estimates Northbound
Earnings estimates for CF have been going up over the past 60 days. The Zacks Consensus Estimate for 2024 has increased by 5.9%. The consensus estimate for the fourth quarter of 2024 has also been revised 1.9% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Superior Return on Equity (ROE) for CF Stock
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12 months for CF Industries is 14.6%, above the industry’s level of 8%.
CF’s Stock Valuation Looks Attractive
CF’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential. Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value fertilizer stocks, CF is currently trading at a trailing 12-month EV/EBITDA multiple of 6.79, cheaper compared with the industry average of 10.45.
CF Stock Gains on Healthy Nitrogen Demand, Lower Gas Costs
CF Industries is benefiting from the rising global demand for nitrogen fertilizers, which is driven by significant agricultural demand. Industrial demand for nitrogen has also recovered from the pandemic-related disruptions. Global demand is expected to remain strong in the near future due to recovering industrial demand and farmer economics.
High levels of corn planted acres and low nitrogen channel inventories are expected to drive demand for nitrogen in North America. Demand for urea is also likely to remain strong in Brazil on higher corn acres. Demand in India is expected to be driven by favorable weather conditions for crop production.
Strong global nitrogen demand and reduced supply availability supported global nitrogen prices in the third quarter of 2024. CF, on its third-quarter call, said that it anticipates the global supply-demand balance to remain constructive, as inventories are believed to be below average globally while energy spreads remain significant between North America and high-cost production in Europe.
The company also stands to benefit from lower natural gas prices. It saw a decline in natural gas costs in the third quarter. The average cost of natural gas fell to $2.10 per MMBtu in the quarter from $2.54 per MMBtu in the year-ago quarter. The benefits of reduced gas costs are expected to continue in the fourth quarter.
CF remains committed to boosting shareholders’ value by leveraging strong cash flows. The company repurchased 14.4 million shares for $1.13 billion in the first nine months of 2024, including 6.1 million shares for $476 million in the third quarter. The current $3 billion share repurchase program had around $1.45 billion remaining at the end of the third quarter. Earlier this year, the company also announced a 25% increase in quarterly dividend to 50 cents per share.
CF Industries Holdings, Inc. Price and Consensus
CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote
CF’s Zacks Rank & Other Key Picks
CF currently carries a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks in the Basic Materials space are IAMGOLD Corporation (IAG - Free Report) , Axalta Coating Systems Ltd. (AXTA - Free Report) and Ingevity Corporation (NGVT - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for IAMGOLD’s current-year earnings has increased by 24.4% in the past 60 days. IAG beat the consensus estimate in each of the last four quarters with the average surprise being 203.4%. Its shares have shot up roughly 128% in the past year.
The Zacks Consensus Estimate for Axalta Coating’s current year earnings is pegged at $2.15, indicating a rise of 36.9% from year-ago levels. The Zacks Consensus Estimate for AXTA’s current year earnings has increased 3.9% in the past 60 days. The stock has rallied around 29% in the past year.
Ingevity beat the consensus estimate in three of the last four quarters while missed once. In this timeframe, it delivered an earnings surprise of 95.4%, on average. NGVT’s shares have gained roughly 15% in the past year.