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The company’s second-quarter performance will likely reflect the benefits of higher nitrogen prices and increased demand. However, high natural gas costs are likely to have affected margins in the to-be-reported quarter.
CF Industries beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missing the same twice. The company has a trailing four-quarter negative earnings surprise of 5.7%, on average.
Shares of CF Industries have skyrocketed 98.7% in the past year compared with a 44.8% rise of the industry.
Image Source: Zacks Investment Research
Let’s see how things have shaped up for this announcement.
Zacks Model
Our proven model conclusively predicts an earnings beat for CF Industries this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for CF Industries is +0.30%. The Zacks Consensus Estimate is currently pegged at $6.06. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries currently carries a Zacks Rank #2.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $3,616 million, which indicates a 127.7% increase year over year.
The Zacks Consensus Estimate for total sales in the Ammonia segment is currently pegged at $1,196 million, calling for a 160.6% rise on a year-over-year basis. The same for the Granular Urea segment is $843 million, which suggests an increase of 94.7% year over year.
The consensus mark for sales of the Urea Ammonium Nitrate Solution segment is currently pegged at $1,086 million, which suggests an increase of 150.2% year over year.
The Zacks Consensus Estimate for total sales of the Ammonium Nitrate segment is currently pegged at $266 million, which indicates an increase of 95.6% year over year.
Factors at Play in Q2
CF Industries is likely to have benefited from higher nitrogen fertilizer demand in major markets in the second quarter. Global nitrogen demand is expected to have remained strong, driven by high crop commodity prices. Industrial demand recovered from the pandemic-related disruptions. Higher economic activities are likely to have contributed to higher industrial consumption of nitrogen products.
Strong nitrogen demand driven by higher commodity crop futures prices and higher nitrogen prices is likely to have aided the company’s margins in the second quarter. Nitrogen prices are likely to have been driven by lower global supply availability resulting from reduced operating rates across Europe and Asia.
The company is also likely to have gained from continued strong demand for urea imports from Brazil and India. Higher crop prices, increased planted corn acres and improved farm economics have been supporting demand in Brazil.
Higher natural gas costs, partly stemming from increased in natural gas costs in Europe, are likely to have increased the cost of sales and impacted the company’s margins in the second quarter.
CF Industries Holdings, Inc. Price and EPS Surprise
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
The Zacks Consensus Estimate for Albemarle’s second-quarter earnings has been revised 21.5% upward in the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.94.
Cabot Corporation (CBT - Free Report) , slated to release earnings on Aug 8, has an Earnings ESP of +0.16% and sports a Zacks Rank #1.
The consensus estimate for Cabot’s fiscal third-quarter earnings has been revised 1% upward in the past 60 days. The Zacks Consensus Estimate for CBT’s earnings for the quarter is pegged at $1.53.
Air Products and Chemicals, Inc. (APD - Free Report) , slated to release earnings on Aug 4, has an Earnings ESP of +0.29% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for Air Products’ fiscal third-quarter earnings has been stable over the past 60 days. The consensus estimate for APD’s earnings for the quarter stands at $2.61.
Image: Bigstock
CF Industries (CF) to Report Q2 Earnings: What's in Store?
CF Industries Holdings, Inc. (CF - Free Report) is set to release second-quarter 2022 results on Aug 1, after the closing bell.
The company’s second-quarter performance will likely reflect the benefits of higher nitrogen prices and increased demand. However, high natural gas costs are likely to have affected margins in the to-be-reported quarter.
CF Industries beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missing the same twice. The company has a trailing four-quarter negative earnings surprise of 5.7%, on average.
Shares of CF Industries have skyrocketed 98.7% in the past year compared with a 44.8% rise of the industry.
Image Source: Zacks Investment Research
Let’s see how things have shaped up for this announcement.
Zacks Model
Our proven model conclusively predicts an earnings beat for CF Industries this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for CF Industries is +0.30%. The Zacks Consensus Estimate is currently pegged at $6.06. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries currently carries a Zacks Rank #2.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $3,616 million, which indicates a 127.7% increase year over year.
The Zacks Consensus Estimate for total sales in the Ammonia segment is currently pegged at $1,196 million, calling for a 160.6% rise on a year-over-year basis. The same for the Granular Urea segment is $843 million, which suggests an increase of 94.7% year over year.
The consensus mark for sales of the Urea Ammonium Nitrate Solution segment is currently pegged at $1,086 million, which suggests an increase of 150.2% year over year.
The Zacks Consensus Estimate for total sales of the Ammonium Nitrate segment is currently pegged at $266 million, which indicates an increase of 95.6% year over year.
Factors at Play in Q2
CF Industries is likely to have benefited from higher nitrogen fertilizer demand in major markets in the second quarter. Global nitrogen demand is expected to have remained strong, driven by high crop commodity prices. Industrial demand recovered from the pandemic-related disruptions. Higher economic activities are likely to have contributed to higher industrial consumption of nitrogen products.
Strong nitrogen demand driven by higher commodity crop futures prices and higher nitrogen prices is likely to have aided the company’s margins in the second quarter. Nitrogen prices are likely to have been driven by lower global supply availability resulting from reduced operating rates across Europe and Asia.
The company is also likely to have gained from continued strong demand for urea imports from Brazil and India. Higher crop prices, increased planted corn acres and improved farm economics have been supporting demand in Brazil.
Higher natural gas costs, partly stemming from increased in natural gas costs in Europe, are likely to have increased the cost of sales and impacted the company’s margins in the second quarter.
CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider, as our model shows these have the right combination of elements to post an earnings beat this quarter:
Albemarle Corporation (ALB - Free Report) , scheduled to release earnings on Aug 3, has an Earnings ESP of +11.9% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Albemarle’s second-quarter earnings has been revised 21.5% upward in the past 60 days. The consensus estimate for ALB’s earnings for the quarter is currently pegged at $2.94.
Cabot Corporation (CBT - Free Report) , slated to release earnings on Aug 8, has an Earnings ESP of +0.16% and sports a Zacks Rank #1.
The consensus estimate for Cabot’s fiscal third-quarter earnings has been revised 1% upward in the past 60 days. The Zacks Consensus Estimate for CBT’s earnings for the quarter is pegged at $1.53.
Air Products and Chemicals, Inc. (APD - Free Report) , slated to release earnings on Aug 4, has an Earnings ESP of +0.29% and carries a Zacks Rank #3.
The Zacks Consensus Estimate for Air Products’ fiscal third-quarter earnings has been stable over the past 60 days. The consensus estimate for APD’s earnings for the quarter stands at $2.61.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.