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CF Industries beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missing it once. The company has a trailing four-quarter negative earnings surprise of 1%, on average. CF’s second-quarter results are likely to reflect the impacts of softer nitrogen prices.
Shares of CF Industries have decreased 10.3% in the past year compared with a 21.6% decline of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $1,855 million, which indicates a 45.3% decline year over year.
Our estimate for total sales in the Ammonia segment is currently pegged at $518.5 million, indicating a 53.5% decline on a year-over-year basis. The same for the Granular Urea segment is $460.2 million, which suggests a decrease of 44.8% year over year.
Our estimate for sales of the Urea Ammonium Nitrate Solution segment is currently pegged at $606.9 million, which suggests a decline of 37.8% year over year.
Our estimate for total sales of the Ammonium Nitrate segment is currently pegged at $146.8 million, which indicates a decline of 42% year over year.
Factors at Play in Q2
CF Industries is expected to have benefited from increasing global demand for nitrogen fertilizers in the second quarter, driven by agricultural and industrial demand. Demand for nitrogen is likely to have remained healthy in the quarter on the back of higher crop commodity prices, high levels of corn planted acres and favorable farm economics. Additionally, lower natural gas prices are expected to have led to a decline in the company's cost of sales.
However, higher global supply availability driven by improved global operating rates due to lower global energy costs has resulted in a decline in prices. Lower average selling prices weighed on CF's top line in the first quarter. The weak pricing environment is expected to have continued in the second quarter. Lower pricing is expected to have hurt the company’s sales and margins.
Our estimate for second-quarter average selling price per ton for the Ammonia segment is pegged at $562, reflecting a 47.8% year-over-year decline. We also expect average selling price per ton for the Granular Urea unit to be $410, indicating a 41.8% year-over-year decline. The same for the UAN segment is pegged at $363, indicating a 39.5% year-over-year decrease. Our estimate for average selling price per ton for the AN unit stands at $399, reflecting a 31.2% year-over-year decline.
CF Industries Holdings, Inc. Price and EPS Surprise
Our proven model does not conclusively predict earnings beat for CF Industries this season. 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. But that’s not the case.
Earnings ESP: CF Industries has an Earnings ESP of -1.28%. The Zacks Consensus Estimate for second-quarter earnings is currently pegged at $2.17. 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 #4 (Sell).
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 earnings beat this quarter:
The Zacks Consensus Estimate for ECL’s second-quarter earnings is pegged at a profit of $1.21.
ATI Inc. (ATI - Free Report) , slated to release earnings on Aug 2, has an Earnings ESP of +1.08% and carries a Zacks Rank #2 at present.
The consensus mark for ATI’s second-quarter earnings is currently pegged at 55 cents.
Axalta Coating Systems Ltd. (AXTA - Free Report) , which is slated to release its earnings on Aug 1, has an Earnings ESP of +6.02% and a Zacks Rank #2 at present.
The consensus estimate for AXTA’s second-quarter earnings is currently pegged at 39 cents.
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 2023 results on Aug 2, after the closing bell.
CF Industries beat the Zacks Consensus Estimate for earnings in three of the trailing four quarters while missing it once. The company has a trailing four-quarter negative earnings surprise of 1%, on average. CF’s second-quarter results are likely to reflect the impacts of softer nitrogen prices.
Shares of CF Industries have decreased 10.3% in the past year compared with a 21.6% decline of the industry.
Image Source: Zacks Investment Research
Let’s see how things are shaping up for this announcement.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $1,855 million, which indicates a 45.3% decline year over year.
Our estimate for total sales in the Ammonia segment is currently pegged at $518.5 million, indicating a 53.5% decline on a year-over-year basis. The same for the Granular Urea segment is $460.2 million, which suggests a decrease of 44.8% year over year.
Our estimate for sales of the Urea Ammonium Nitrate Solution segment is currently pegged at $606.9 million, which suggests a decline of 37.8% year over year.
Our estimate for total sales of the Ammonium Nitrate segment is currently pegged at $146.8 million, which indicates a decline of 42% year over year.
Factors at Play in Q2
CF Industries is expected to have benefited from increasing global demand for nitrogen fertilizers in the second quarter, driven by agricultural and industrial demand. Demand for nitrogen is likely to have remained healthy in the quarter on the back of higher crop commodity prices, high levels of corn planted acres and favorable farm economics. Additionally, lower natural gas prices are expected to have led to a decline in the company's cost of sales.
However, higher global supply availability driven by improved global operating rates due to lower global energy costs has resulted in a decline in prices. Lower average selling prices weighed on CF's top line in the first quarter. The weak pricing environment is expected to have continued in the second quarter. Lower pricing is expected to have hurt the company’s sales and margins.
Our estimate for second-quarter average selling price per ton for the Ammonia segment is pegged at $562, reflecting a 47.8% year-over-year decline. We also expect average selling price per ton for the Granular Urea unit to be $410, indicating a 41.8% year-over-year decline. The same for the UAN segment is pegged at $363, indicating a 39.5% year-over-year decrease. Our estimate for average selling price per ton for the AN unit stands at $399, reflecting a 31.2% year-over-year decline.
CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote
Earnings Whispers
Our proven model does not conclusively predict earnings beat for CF Industries this season. 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. But that’s not the case.
Earnings ESP: CF Industries has an Earnings ESP of -1.28%. The Zacks Consensus Estimate for second-quarter earnings is currently pegged at $2.17. 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 #4 (Sell).
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 earnings beat this quarter:
Ecolab Inc. (ECL - Free Report) , slated to release earnings on Aug 1, has an Earnings ESP of +0.50% and carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks Rank #1 stocks here.
The Zacks Consensus Estimate for ECL’s second-quarter earnings is pegged at a profit of $1.21.
ATI Inc. (ATI - Free Report) , slated to release earnings on Aug 2, has an Earnings ESP of +1.08% and carries a Zacks Rank #2 at present.
The consensus mark for ATI’s second-quarter earnings is currently pegged at 55 cents.
Axalta Coating Systems Ltd. (AXTA - Free Report) , which is slated to release its earnings on Aug 1, has an Earnings ESP of +6.02% and a Zacks Rank #2 at present.
The consensus estimate for AXTA’s second-quarter earnings is currently pegged at 39 cents.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.