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Is CF Industries (CF) Poised for a Beat in Q1 Earnings?
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CF Industries (CF - Free Report) is set to release first-quarter 2017 results after the closing bell on May 3.
Last quarter, the fertilizer maker delivered a negative earnings surprise of 550%. Its sales, fell 22% year over year on reduced selling prices across all segments, and missed estimates.
CF Industries missed the Zacks Consensus Estimate in three of the trailing four quarters while beating in one with an average negative surprise of 115.76%. Let’s see how things are shaping up for this announcement.
CF Industries Holdings, Inc. Price and EPS Surprise
Our proven model shows that CF Industries has the right combination of two key ingredients to beat earnings. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: The Earnings ESP for CF Industries is +55.56%. This is because the Most Accurate Estimate is pegged at 14 cents, while the Zacks Consensus Estimate is 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries’ Zacks Rank #3 increases the predictive power of its ESP.
Note that Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors to Consider
CF Industries expects nitrogen demand in North America to be relatively unchanged on a year-over-year basis in 2017. The company envisions 89.5 million acres of corn to be planted and less than 50 million acres of wheat to be planted in the U.S. this year. In Canada, reduced grain planting is expected to be more than offset by higher canola plantings. As such, the company sees total nitrogen fertilizer demand in North America to be roughly 16 million nutrient tons for 2017.
CF Industries also anticipates nitrogen prices to improve in North America during the first half of 2017. However, an uncertain pricing environment is expected during the second half as additional nitrogen capacity comes online globally including a considerable increase in North America.
CF Industries is well placed to gain from its efforts to expand production capacity. CF Industries, in late 2016, completed its capacity expansion projects across Louisiana and Lowa. The company, in Dec 2016, announced the successful start of new ammonia and urea plants at Port Neal, IA, and nitrogen complex. The company believes the capacity expansion will help in growth and increase cash generation capability.
Low natural gas prices have also been an advantage for CF Industries. The company’s nitrogen business is enjoying the benefit of abundant natural gas supply, driven by an increase in production of North American shale gas.
CF Industries’ shares rallied around 8.3% in the past six months, outperforming the Zacks categorized Fertilizers industry’s roughly 7.6% gain.
However, the company faces significant pricing pressure. High supply in the global nitrogen market due to capacity additions are hurting prices. The company sees an uncertain pricing environment during second-half 2017 as additional nitrogen capacity comes online globally. The company is also exposed to challenging agriculture market fundamentals.
Stocks to Consider
Here are some companies in the basic materials space that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Westlake Chemical Corporation (WLK - Free Report) has an Earnings ESP of +1.25% and carries a Zacks Rank #3.
Franco-Nevada Corporation (FNV - Free Report) has an Earnings ESP of +10% and flaunts a Zacks Rank #3.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
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Is CF Industries (CF) Poised for a Beat in Q1 Earnings?
CF Industries (CF - Free Report) is set to release first-quarter 2017 results after the closing bell on May 3.
Last quarter, the fertilizer maker delivered a negative earnings surprise of 550%. Its sales, fell 22% year over year on reduced selling prices across all segments, and missed estimates.
CF Industries missed the Zacks Consensus Estimate in three of the trailing four quarters while beating in one with an average negative surprise of 115.76%. Let’s see how things are shaping up for this announcement.
CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. Price and EPS Surprise | CF Industries Holdings, Inc. Quote
Earnings Whispers
Our proven model shows that CF Industries has the right combination of two key ingredients to beat earnings. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen.
Zacks ESP: The Earnings ESP for CF Industries is +55.56%. This is because the Most Accurate Estimate is pegged at 14 cents, while the Zacks Consensus Estimate is 9 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries’ Zacks Rank #3 increases the predictive power of its ESP.
Note that Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement, especially when the company is witnessing negative estimate revisions.
Factors to Consider
CF Industries expects nitrogen demand in North America to be relatively unchanged on a year-over-year basis in 2017. The company envisions 89.5 million acres of corn to be planted and less than 50 million acres of wheat to be planted in the U.S. this year. In Canada, reduced grain planting is expected to be more than offset by higher canola plantings. As such, the company sees total nitrogen fertilizer demand in North America to be roughly 16 million nutrient tons for 2017.
CF Industries also anticipates nitrogen prices to improve in North America during the first half of 2017. However, an uncertain pricing environment is expected during the second half as additional nitrogen capacity comes online globally including a considerable increase in North America.
CF Industries is well placed to gain from its efforts to expand production capacity. CF Industries, in late 2016, completed its capacity expansion projects across Louisiana and Lowa. The company, in Dec 2016, announced the successful start of new ammonia and urea plants at Port Neal, IA, and nitrogen complex. The company believes the capacity expansion will help in growth and increase cash generation capability.
Low natural gas prices have also been an advantage for CF Industries. The company’s nitrogen business is enjoying the benefit of abundant natural gas supply, driven by an increase in production of North American shale gas.
CF Industries’ shares rallied around 8.3% in the past six months, outperforming the Zacks categorized Fertilizers industry’s roughly 7.6% gain.
However, the company faces significant pricing pressure. High supply in the global nitrogen market due to capacity additions are hurting prices. The company sees an uncertain pricing environment during second-half 2017 as additional nitrogen capacity comes online globally. The company is also exposed to challenging agriculture market fundamentals.
Stocks to Consider
Here are some companies in the basic materials space that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +4.1% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Westlake Chemical Corporation (WLK - Free Report) has an Earnings ESP of +1.25% and carries a Zacks Rank #3.
Franco-Nevada Corporation (FNV - Free Report) has an Earnings ESP of +10% and flaunts a Zacks Rank #3.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500.
See today's Zacks "Strong Sells" absolutely free >>.