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CF Industries Holdings, Inc.’s (CF - Free Report) shares have shot up 47.6% over the past three months. The company has outperformed its industry’s rise of 39.7% over the same time frame. It has also topped the S&P 500’s roughly 9.9% decline over the same period.
Let’s take a look into the factors that are driving this fertilizer maker.
Image Source: Zacks Investment Research
What’s Going in CF’s Favor?
Forecast-topping earnings performance in the fourth quarter and upbeat prospects have contributed to the rally in the company's shares. CF Industries, a Zacks Rank #3 (Hold) stock, logged adjusted earnings per share of $3.71 in the fourth quarter, topping the Zacks Consensus Estimate of $3.41. The company benefited from higher average selling prices across its segments in the quarter.
CF Industries, on its fourth-quarter call, said that it expects global nitrogen supply and demand balance to remain tight in the foreseeable future. The company anticipates the commercial environment to be highly favorable for producers in low-cost regions in 2022. The global demand for nitrogen is projected to be strong. Higher economic activity continues to drive strong demand for diesel exhaust fluid for emissions abatement as well as ammonia, urea and nitric acid for industrial uses, the company noted.
CF Industries is gaining from higher nitrogen fertilizer demand in major markets. Global demand for nitrogen is expected to remain strong in 2022. Higher crop commodity prices are contributing to healthy demand globally. Industrial demand has also recovered from the pandemic-related disruptions. In 2022, demand for nitrogen is expected to be driven by higher industrial and economic activities and high levels of corn planted acres in the United States. Demand for urea imports from Brazil and India is also expected to be strong this year. Higher crop prices, increased planted corn acres and improved farm economics are likely to increase demand in Brazil.
The company is also benefiting from higher nitrogen prices on the back of lower supply resulting from reduced operating rates across Europe and Asia due to higher energy prices. Higher nitrogen prices are driving its sales as witnessed in the last-reported quarter. The positive pricing environment is expected to continue moving ahead.
CF Industries also remains committed to boosting shareholders’ value by leveraging strong cash flows. It generated operating cash flows of roughly $2.9 billion and free cash flow of around $2.2 billion in 2021. The company also paid dividend worth $260 million in 2021. During the fourth quarter, it repurchased around 7.5 million shares for $490 million. Its board, in November 2021, approved a new $1.5 billion share repurchase program.
Earnings estimates for CF Industries have also been going up over the past two months. The Zacks Consensus Estimate for 2022 has increased around 13.6%. The favorable estimate revisions instill investor confidence in the stock.
Some better-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Mosaic, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 22.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 70% in a year.
AdvanSix, carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 20.8% for the current year. ASIX's consensus estimate for current-year earnings has been revised 15.7% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 77% in a year.
Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 45% in a year.
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CF Industries (CF) Shares Rally 48% in 3 Months: Here's Why
CF Industries Holdings, Inc.’s (CF - Free Report) shares have shot up 47.6% over the past three months. The company has outperformed its industry’s rise of 39.7% over the same time frame. It has also topped the S&P 500’s roughly 9.9% decline over the same period.
Let’s take a look into the factors that are driving this fertilizer maker.
Image Source: Zacks Investment Research
What’s Going in CF’s Favor?
Forecast-topping earnings performance in the fourth quarter and upbeat prospects have contributed to the rally in the company's shares. CF Industries, a Zacks Rank #3 (Hold) stock, logged adjusted earnings per share of $3.71 in the fourth quarter, topping the Zacks Consensus Estimate of $3.41. The company benefited from higher average selling prices across its segments in the quarter.
CF Industries, on its fourth-quarter call, said that it expects global nitrogen supply and demand balance to remain tight in the foreseeable future. The company anticipates the commercial environment to be highly favorable for producers in low-cost regions in 2022. The global demand for nitrogen is projected to be strong. Higher economic activity continues to drive strong demand for diesel exhaust fluid for emissions abatement as well as ammonia, urea and nitric acid for industrial uses, the company noted.
CF Industries is gaining from higher nitrogen fertilizer demand in major markets. Global demand for nitrogen is expected to remain strong in 2022. Higher crop commodity prices are contributing to healthy demand globally. Industrial demand has also recovered from the pandemic-related disruptions. In 2022, demand for nitrogen is expected to be driven by higher industrial and economic activities and high levels of corn planted acres in the United States. Demand for urea imports from Brazil and India is also expected to be strong this year. Higher crop prices, increased planted corn acres and improved farm economics are likely to increase demand in Brazil.
The company is also benefiting from higher nitrogen prices on the back of lower supply resulting from reduced operating rates across Europe and Asia due to higher energy prices. Higher nitrogen prices are driving its sales as witnessed in the last-reported quarter. The positive pricing environment is expected to continue moving ahead.
CF Industries also remains committed to boosting shareholders’ value by leveraging strong cash flows. It generated operating cash flows of roughly $2.9 billion and free cash flow of around $2.2 billion in 2021. The company also paid dividend worth $260 million in 2021. During the fourth quarter, it repurchased around 7.5 million shares for $490 million. Its board, in November 2021, approved a new $1.5 billion share repurchase program.
Earnings estimates for CF Industries have also been going up over the past two months. The Zacks Consensus Estimate for 2022 has increased around 13.6%. The favorable estimate revisions instill investor confidence in the stock.
CF Industries Holdings, Inc. Price and Consensus
CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote
Stocks to Consider
Some better-ranked stocks worth considering in the basic materials space include The Mosaic Company (MOS - Free Report) , AdvanSix Inc. (ASIX - Free Report) and Commercial Metals Company (CMC - Free Report) .
Mosaic, sporting a Zacks Rank #1 (Strong Buy), has a projected earnings growth rate of 106.4% for the current year. The Zacks Consensus Estimate for MOS's current-year earnings has been revised 22.2% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missed once. It has a trailing four-quarter earnings surprise of roughly 3.7%, on average. MOS has rallied around 70% in a year.
AdvanSix, carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 20.8% for the current year. ASIX's consensus estimate for current-year earnings has been revised 15.7% upward in the past 60 days.
AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied around 77% in a year.
Commercial Metals, carrying a Zacks Rank #2, has a projected earnings growth rate of 62% for the current fiscal year. The Zacks Consensus Estimate for CMC's current fiscal year earnings has been revised 22.7% upward over the past 60 days.
Commercial Metals beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 13.1%, on average. CMC has gained around 45% in a year.