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CF Industries' (CF) Earnings and Sales Miss Estimates in Q2

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CF Industries Holdings, Inc. (CF - Free Report) reported a profit of $246 million or $1.14 per share in the second quarter of 2021, up from a profit of $190 million or 89 cents in the year-ago quarter. Earnings per share, however, missed the Zacks Consensus Estimate of $1.64.

Net sales increased around 32% year over year to $1,588 million in the quarter. However, the figure lagged the Zacks Consensus Estimate of $1,718.7 million.
 
Average selling prices in the reported quarter were higher on a year-over-year basis across all segments due to lower global supply availability and strong demand. But sales volume in the second quarter was lower than the prior-year quarter’s levels due to lower supply availability stemming from reduced production.

 

CF Industries Holdings, Inc. Price, Consensus and EPS Surprise

 

CF Industries Holdings, Inc. Price, Consensus and EPS Surprise

CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. Quote

 

Segment Review

Net sales in the Ammonia segment went up roughly 26% year over year to $459 million in the reported quarter. Sales volume declined owing to lower supply availability on reduced production. Average selling prices increased year over year due to lower global supply availability and demand strength.

Sales in the Granular Urea segment increased around 32% year over year to $433 million. Average selling prices for urea increased due to strong demand and lower global supply availability, while sales volume fell due to lower supply availability.

Sales in the UAN segment rose 41% year over year to $434 million. Sales volume increased owing to due to inventory draw-down. Average selling prices rose due to lower global supply availability and higher demand.

Sales in the AN segment increased around 15% year over year to $136 million. Sales volumes fell year over year due to lower supply availability. Average selling prices increased due to strong demand and lower global supply availability.

Financials

CF Industries’ cash and cash equivalents increased around 38% year over year to $777 million at the end of the quarter. Long-term debt was $3,713 million at the end of the quarter, down around 6% year over year.

Cash flow from operations amounted to $128 million in the reported quarter, down around 70% year over year.

Outlook

CF Industries expects nitrogen pricing to be positive as higher economic activities, the need to replenish coarse grains stocks globally and increased energy prices in Europe and Asia is expected to sustain a tighter global nitrogen supply and demand balance into 2023.

The global demand for nitrogen is also strong, the company noted. It expects strong global demand for coarse grains to contribute to sustained low global stocks into 2022, supporting strong nitrogen demand in upcoming years. Higher economic activities have also contributed to higher industrial consumption of nitrogen products.

Price Performance

Shares of CF Industries have gained 34.9% in the past year compared with 50.6% rise of the industry.

 

Zacks Investment Research
Image Source: Zacks Investment Research

 

Zacks Rank & Key Picks

CF Industries currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Nucor Corporation (NUE - Free Report) , ArcelorMittal (MT - Free Report) and Olin Corporation (OLN - Free Report) .

Nucor has a projected earnings growth rate of 455.7% for the current year. The company’s shares have surged around 137% in a year. It sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ArcelorMittal has an expected earnings growth rate of 1,731.2% for the current year. The company’s shares have shot up around 183% in the past year. It carries a Zacks Rank #1

Olin has an expected earnings growth rate of around 590.4% for the current fiscal. The company’s shares have surged roughly 304% in the past year. It carries a Zacks Rank #2 (Buy).