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CF Industries' (CF) Q2 Earnings Surpass Estimates, Sales Miss
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CF Industries Holdings, Inc. (CF - Free Report) reported second-quarter 2023 earnings of $2.70 per share, down from $5.58 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $2.15.
Net sales fell around 47.6% year over year to $1,775 million in the quarter, missing the Zacks Consensus Estimate of $1,850 million.
CF Industries Holdings, Inc. Price, Consensus and EPS Surprise
Net sales in the Ammonia segment decreased 53% to $525 million in the reported quarter, higher than our estimate of $518.5 million. Ammonia adjusted gross margin per ton decreased in first-half 2023 from the year-ago period due to lower average selling prices partly offset by lower realized natural gas prices.
Sales in the Granular Urea segment fell 44.8% year over year to $460 million, lower than our estimate of $460.2 million. Granular urea adjusted gross margin per ton decreased in first-half 2023 from the year-ago period mainly due to a decline in average selling prices partly offset by lower realized natural gas prices.
Sales in the Urea Ammonium Nitrate segment fell around 43.9% year over year to $548 million, lower than our estimate of $606.9 million. Adjusted gross margin per ton decreased in first-half 2023 from the year-ago period mainly due to reduced average selling prices partly offset by a decline in realized natural gas prices.
Sales in the Ammonium Nitrate segment fell around 58.9% year over year to $104 million, lower than our estimate of $146.8 million. Adjusted gross margin per ton decreased in first-half 2023 from the year-ago period due to lower average selling prices partly offset by the impact of using lower-cost imported ammonia for ammonium nitrate production in the U.K. and reduced realized natural gas prices.
Financials
As of Jun 30, CF Industries’ cash and cash equivalents were $3,219 million compared with $2,323 million as of Dec 31, 2022. Long-term debt was $2,967 million at the end of the quarter compared with $2,965 as of Dec 31, 2022.
Net cash provided by operating activities was $712 million in the reported quarter, down nearly 19.9% year over year.
During the first half of 2023, the company repurchased 3.1 million shares for $205 million, which included the purchase of 2 million shares for $130 million during the second quarter.
Outlook
According to CF Industries, the global nitrogen supply-demand balance will continue to be positive owing to robust demand from agricultural and forward energy curves displaying an elevated cost curve. Energy price differences between major producers in North America and minor producers in Europe and Asia continue to be significantly higher than historical levels. These stronger differentials are expected to last for a considerable amount of time, based on forward energy curves. According to the company, there will continue to be considerable margin opportunities for low-cost North American producers on the back of the global nitrogen cost curve.
Price Performance
Shares of CF Industries have declined 16.7% in the past year compared with a 22.9% fall of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
CF Industries currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth considering in the basic materials space include PPG Industries Inc. (PPG - Free Report) , ATI Inc. (ATI - Free Report) and Carpenter Technology Corporation (CRS - Free Report) .
PPG, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 20.8% for the current fiscal year. The Zacks Consensus Estimate for PPG's earnings for the current fiscal year has been revised 1.6% upward in the past 60 days. It delivered an earnings surprise of 7.3% each of the trailing four quarters, on average. PPG has gained around 10.5% over a year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATI, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 13.1% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13%, on average. ATI shares are up around 77.8% in a year.
CRS, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 198.11% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. CRS shares are up around 76.6% in a year.
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CF Industries' (CF) Q2 Earnings Surpass Estimates, Sales Miss
CF Industries Holdings, Inc. (CF - Free Report) reported second-quarter 2023 earnings of $2.70 per share, down from $5.58 in the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $2.15.
Net sales fell around 47.6% year over year to $1,775 million in the quarter, missing the Zacks Consensus Estimate of $1,850 million.
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 decreased 53% to $525 million in the reported quarter, higher than our estimate of $518.5 million. Ammonia adjusted gross margin per ton decreased in first-half 2023 from the year-ago period due to lower average selling prices partly offset by lower realized natural gas prices.
Sales in the Granular Urea segment fell 44.8% year over year to $460 million, lower than our estimate of $460.2 million. Granular urea adjusted gross margin per ton decreased in first-half 2023 from the year-ago period mainly due to a decline in average selling prices partly offset by lower realized natural gas prices.
Sales in the Urea Ammonium Nitrate segment fell around 43.9% year over year to $548 million, lower than our estimate of $606.9 million. Adjusted gross margin per ton decreased in first-half 2023 from the year-ago period mainly due to reduced average selling prices partly offset by a decline in realized natural gas prices.
Sales in the Ammonium Nitrate segment fell around 58.9% year over year to $104 million, lower than our estimate of $146.8 million. Adjusted gross margin per ton decreased in first-half 2023 from the year-ago period due to lower average selling prices partly offset by the impact of using lower-cost imported ammonia for ammonium nitrate production in the U.K. and reduced realized natural gas prices.
Financials
As of Jun 30, CF Industries’ cash and cash equivalents were $3,219 million compared with $2,323 million as of Dec 31, 2022. Long-term debt was $2,967 million at the end of the quarter compared with $2,965 as of Dec 31, 2022.
Net cash provided by operating activities was $712 million in the reported quarter, down nearly 19.9% year over year.
During the first half of 2023, the company repurchased 3.1 million shares for $205 million, which included the purchase of 2 million shares for $130 million during the second quarter.
Outlook
According to CF Industries, the global nitrogen supply-demand balance will continue to be positive owing to robust demand from agricultural and forward energy curves displaying an elevated cost curve. Energy price differences between major producers in North America and minor producers in Europe and Asia continue to be significantly higher than historical levels. These stronger differentials are expected to last for a considerable amount of time, based on forward energy curves. According to the company, there will continue to be considerable margin opportunities for low-cost North American producers on the back of the global nitrogen cost curve.
Price Performance
Shares of CF Industries have declined 16.7% in the past year compared with a 22.9% fall of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
CF Industries currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks worth considering in the basic materials space include PPG Industries Inc. (PPG - Free Report) , ATI Inc. (ATI - Free Report) and Carpenter Technology Corporation (CRS - Free Report) .
PPG, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 20.8% for the current fiscal year. The Zacks Consensus Estimate for PPG's earnings for the current fiscal year has been revised 1.6% upward in the past 60 days. It delivered an earnings surprise of 7.3% each of the trailing four quarters, on average. PPG has gained around 10.5% over a year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATI, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 13.1% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13%, on average. ATI shares are up around 77.8% in a year.
CRS, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 198.11% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. CRS shares are up around 76.6% in a year.