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Here's Why You Should Invest in CF Industries (CF) Stock Now
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CF Industries Holdings, Inc.’s (CF - Free Report) shares have popped 15% over the past three months. It is well-placed to benefit from the rising nitrogen fertilizer demand in major markets.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Let's see what makes this this Zacks Rank #1 (Strong Buy) stock an attractive investment option at the moment.
Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for CF Industries for 2023 has increased around 3.1%. The consensus estimate for 2024 has also been revised 4.9% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Positive Earnings Surprise History
CF Industries outperformed the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter average earnings surprise of 4.8%.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for CF Industries is 31.2%, above the industry’s level of 23%.
Attractive Valuation
Valuation looks attractive as CF’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value fertilizer stocks, CF is currently trading at trailing 12-month EV/EBITDA multiple of 3.82, cheaper compared with the industry average of 6.60.
Healthy Nitrogen Demand & Lower Gas Costs Bode Well
CF Industries is benefiting from healthy nitrogen fertilizer demand in major markets and lower natural gas costs. The company is well-positioned to capitalize on rising nitrogen fertilizer demand in major markets. Higher crop commodity prices are contributing to healthy demand globally.
Demand for nitrogen in North America is expected to be driven by high levels of corn planted acres in the United States and favorable farm economics. Moreover, increased planted corn acres, higher crop prices and healthy farm economics are likely to support urea demand in Brazil. CF also expects demand in India to be driven by the government’s plans to maintain high urea volumes in stock.
Lower natural gas prices are also acting in the company’s favor. CF Industries saw a significant decline in natural gas costs in the second quarter of 2023. Average cost of natural gas fell to $2.75 per MMBtu in the second quarter of 2023 from $7.05 per MMBtu in the year-ago quarter. Lower natural gas costs led to a decline in the company's cost of sales. The benefits of reduced gas costs are expected to continue in the third quarter.
Other top-ranked stocks worth a look in the basic materials space include Quaker Chemical Corporation (KWR - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Quaker Chemical has a trailing four-quarter earnings surprise of roughly 20%, on average. KWR shares are up around 13% in a year.
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #2.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 94% over the past year.
Andersons currently carries a Zacks Rank #2. The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 3.3% upward over the past 60 days.
Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average. ANDE shares have rallied around 53% in a year.
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Here's Why You Should Invest in CF Industries (CF) Stock Now
CF Industries Holdings, Inc.’s (CF - Free Report) shares have popped 15% over the past three months. It is well-placed to benefit from the rising nitrogen fertilizer demand in major markets.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to the portfolio as it looks promising and is poised to carry the momentum ahead.
Let's see what makes this this Zacks Rank #1 (Strong Buy) stock an attractive investment option at the moment.
Estimates Northbound
Over the past two months, the Zacks Consensus Estimate for CF Industries for 2023 has increased around 3.1%. The consensus estimate for 2024 has also been revised 4.9% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.
Positive Earnings Surprise History
CF Industries outperformed the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter average earnings surprise of 4.8%.
Superior Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for CF Industries is 31.2%, above the industry’s level of 23%.
Attractive Valuation
Valuation looks attractive as CF’s shares are currently trading at a level that is lower than the industry average, suggesting that the stock still has upside potential.
Going by the EV/EBITDA (Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization) multiple, which is often used to value fertilizer stocks, CF is currently trading at trailing 12-month EV/EBITDA multiple of 3.82, cheaper compared with the industry average of 6.60.
Healthy Nitrogen Demand & Lower Gas Costs Bode Well
CF Industries is benefiting from healthy nitrogen fertilizer demand in major markets and lower natural gas costs. The company is well-positioned to capitalize on rising nitrogen fertilizer demand in major markets. Higher crop commodity prices are contributing to healthy demand globally.
Demand for nitrogen in North America is expected to be driven by high levels of corn planted acres in the United States and favorable farm economics. Moreover, increased planted corn acres, higher crop prices and healthy farm economics are likely to support urea demand in Brazil. CF also expects demand in India to be driven by the government’s plans to maintain high urea volumes in stock.
Lower natural gas prices are also acting in the company’s favor. CF Industries saw a significant decline in natural gas costs in the second quarter of 2023. Average cost of natural gas fell to $2.75 per MMBtu in the second quarter of 2023 from $7.05 per MMBtu in the year-ago quarter. Lower natural gas costs led to a decline in the company's cost of sales. The benefits of reduced gas costs are expected to continue in the third quarter.
CF Industries Holdings, Inc. Price and Consensus
CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote
Stocks to Consider
Other top-ranked stocks worth a look in the basic materials space include Quaker Chemical Corporation (KWR - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and The Andersons Inc. (ANDE - Free Report) .
Quaker Chemical has a projected earnings growth rate of 27.1% for the current year. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Quaker Chemical has a trailing four-quarter earnings surprise of roughly 20%, on average. KWR shares are up around 13% in a year.
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #2.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 94% over the past year.
Andersons currently carries a Zacks Rank #2. The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 3.3% upward over the past 60 days.
Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4%, on average. ANDE shares have rallied around 53% in a year.