A month has gone by since the last earnings report for CF Industries (
CF Quick Quote CF - Free Report) . Shares have lost about 2.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CF due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CF Industries' Earnings In Line, Sales Top Estimates in Q1
CF Industries reported a profit of $883 million or $4.21 per share in the first quarter of 2022, surging from a profit of $151 million or 70 cents in the year-ago quarter. Earnings per share were in line with the Zacks Consensus Estimate.
Net sales jumped around 174% year over year to $2,868 million in the quarter. The figure topped the Zacks Consensus Estimate of $2,596.9 million. The company benefited from higher average selling prices across all segments on reduced supply availability and strong demand. Supply was impacted by higher global energy costs leading to lower global operating rates and geopolitical factors that disrupted the global fertilizer supply chain. Sales volumes were higher year over year in the reported quarter, helped by greater supply availability from higher capacity utilization rates in North America. Segment Review
Net sales in the Ammonia segment increased more than three-fold year over year to $640 million in the reported quarter. Sales volume increased from the prior year’s levels on greater supply availability from higher production. Average selling prices in the quarter increased year over year on strong global demand and lower supply availability.
Sales in the Granular Urea segment jumped 92% year over year to $765 million. Average selling prices for urea increased while sales volume declined in the quarter. Sales in the UAN segment surged more than four-fold year over year to $1,015 million. Sales volume in the quarter were up from prior year’s levels. Average selling prices increased in the quarter. Sales in the AN segment more than doubled year over year to $223 million. In the first quarter, sales volumes were flat year over year while average selling prices increased on strong demand and reduced supply. Financials
CF Industries’ cash and cash equivalents increased more than three-fold year over year to $2,617 million at the end of the quarter. Long-term debt was $2,963 million at the end of the quarter, down around 20% year over year.
Cash flow from operations were $1,391 million for the reported quarter, up around 141% year over year. Outlook
CF Industries sees strong global nitrogen industry dynamics for the foreseeable future with robust global nitrogen demand along with tight nitrogen supply worldwide and wide energy differentials between North America and marginal production in Europe and Asia.
Demand for nitrogen remains strong globally, supported by the need to replenish global grains stocks, per the company. It projects corn plantings in the United States to be 91-93 million acres in 2022. Nitrogen demand in North America is expected to be supported by positive U.S. manufacturing and mining activities. CF Industries also expects India to tender on a regular basis throughout 2022 to meet the demand for urea required to boost grain production. The company also envisions urea consumption to remain strong in Brazil in 2022, aided by high crop prices, anticipated high planted corn acres and improved farm incomes. In Europe, natural gas prices remain elevated partly due to the Russia-Ukraine conflict and the uncertainty about gas flows from Russia, the company noted. How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 17.91% due to these changes.
At this time, CF has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, CF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.