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CF (CF) Up 9.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for CF Industries (CF - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CF due for a pullback? 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 logged fourth-quarter 2023 earnings of $1.44 per share, down from $4.35 in the year-ago quarter.
Barring one-time items, earnings came in at $1.49 per share for the reported quarter. The figure missed the Zacks Consensus Estimate of $1.56.
Net sales fell around 40% year over year to roughly $1.57 billion in the quarter. It, however, beat the Zacks Consensus Estimate of $1.49 billion. Sales were hurt by lower average selling prices as lower global energy costs led to reduced global market clearing price required to meet global demand.
Sales volumes rose year over year in the reported quarter on the back of higher urea ammonium nitrate, ammonia and diesel exhaust fluid sales volumes.
Segment Review
Net sales in the Ammonia segment decreased 38% year over year to $495 million in the reported quarter. It was above our estimate of $368 million. Average selling price per product ton was $460, which was above our estimate of $458. Ammonia adjusted gross margin per ton decreased for full-year 2023 compared with 2022 due to lower average selling prices, partly offset by lower realized natural gas prices.
Sales in the Granular Urea segment fell around 35% year over year to $392 million. It was lower than our estimate of $417.5 million. Average selling price per product ton was $378, which lagged our estimate of $387. Granular urea adjusted gross margin per ton decreased for full-year 2023 compared with 2022 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 51% year over year to $418 million. It lagged our estimate of $470 million. Average selling price per product ton was $231, which was below our estimate of $298. Adjusted gross margin per ton decreased for full-year 2023 compared with 2022 mainly due to reduced average selling prices that more than offset a decline in realized natural gas costs.
Sales in the Ammonium Nitrate segment fell around 37% year over year to $120 million. It was higher than our estimate of $116.7 million. Average selling price per product ton was $290, which was below our estimate of $316. Adjusted gross margin per ton decreased for full-year 2023 compared with 2022 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 in North America.
FY23 Results
Earnings for full-year 2023 were $7.87 per share, down from $16.38 per share a year ago. Net sales declined around 41% year over year to roughly $6.6 billion.
Financials
CF Industries ended 2023 with cash and cash equivalents of $2.03 billion, down around 13% year over year. Long-term debt was $2.97 billion at the end of 2023, essentially flat year over year.
Net cash provided by operating activities was $480 million in the reported quarter, down around 18% year over year.
During the fourth quarter, the company repurchased 2.9 million shares for $225 million. It repurchased around 7.9 million shares for $580 million during 2023.
Outlook
CF noted that global nitrogen industry fundamentals indicate a constructive global nitrogen supply-demand balance in the near term and a tightening global nitrogen supply-demand balance in the medium term. It sees global nitrogen demand to remain resilient in the near term on the back of continued strong agriculture applications and recovering industrial demand. Major producing regions remain exposed to challenging production economics due to the cost and availability of natural gas, CF noted.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -13.44% due to these changes.
VGM Scores
At this time, CF has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CF belongs to the Zacks Fertilizers industry. Another stock from the same industry, Scotts Miracle-Gro (SMG - Free Report) , has gained 9.8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Scotts reported revenues of $410.4 million in the last reported quarter, representing a year-over-year change of -22.1%. EPS of -$1.45 for the same period compares with -$1.02 a year ago.
Scotts is expected to post earnings of $3.24 per share for the current quarter, representing a year-over-year change of -14.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Scotts. Also, the stock has a VGM Score of C.
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CF (CF) Up 9.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for CF Industries (CF - Free Report) . Shares have added about 9.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CF due for a pullback? 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' Q4 Earnings Lag, Lower Prices Hurt Sales
CF Industries logged fourth-quarter 2023 earnings of $1.44 per share, down from $4.35 in the year-ago quarter.
Barring one-time items, earnings came in at $1.49 per share for the reported quarter. The figure missed the Zacks Consensus Estimate of $1.56.
Net sales fell around 40% year over year to roughly $1.57 billion in the quarter. It, however, beat the Zacks Consensus Estimate of $1.49 billion. Sales were hurt by lower average selling prices as lower global energy costs led to reduced global market clearing price required to meet global demand.
Sales volumes rose year over year in the reported quarter on the back of higher urea ammonium nitrate, ammonia and diesel exhaust fluid sales volumes.
Segment Review
Net sales in the Ammonia segment decreased 38% year over year to $495 million in the reported quarter. It was above our estimate of $368 million. Average selling price per product ton was $460, which was above our estimate of $458. Ammonia adjusted gross margin per ton decreased for full-year 2023 compared with 2022 due to lower average selling prices, partly offset by lower realized natural gas prices.
Sales in the Granular Urea segment fell around 35% year over year to $392 million. It was lower than our estimate of $417.5 million. Average selling price per product ton was $378, which lagged our estimate of $387. Granular urea adjusted gross margin per ton decreased for full-year 2023 compared with 2022 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 51% year over year to $418 million. It lagged our estimate of $470 million. Average selling price per product ton was $231, which was below our estimate of $298. Adjusted gross margin per ton decreased for full-year 2023 compared with 2022 mainly due to reduced average selling prices that more than offset a decline in realized natural gas costs.
Sales in the Ammonium Nitrate segment fell around 37% year over year to $120 million. It was higher than our estimate of $116.7 million. Average selling price per product ton was $290, which was below our estimate of $316. Adjusted gross margin per ton decreased for full-year 2023 compared with 2022 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 in North America.
FY23 Results
Earnings for full-year 2023 were $7.87 per share, down from $16.38 per share a year ago. Net sales declined around 41% year over year to roughly $6.6 billion.
Financials
CF Industries ended 2023 with cash and cash equivalents of $2.03 billion, down around 13% year over year. Long-term debt was $2.97 billion at the end of 2023, essentially flat year over year.
Net cash provided by operating activities was $480 million in the reported quarter, down around 18% year over year.
During the fourth quarter, the company repurchased 2.9 million shares for $225 million. It repurchased around 7.9 million shares for $580 million during 2023.
Outlook
CF noted that global nitrogen industry fundamentals indicate a constructive global nitrogen supply-demand balance in the near term and a tightening global nitrogen supply-demand balance in the medium term. It sees global nitrogen demand to remain resilient in the near term on the back of continued strong agriculture applications and recovering industrial demand. Major producing regions remain exposed to challenging production economics due to the cost and availability of natural gas, CF noted.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted -13.44% due to these changes.
VGM Scores
At this time, CF has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CF has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CF belongs to the Zacks Fertilizers industry. Another stock from the same industry, Scotts Miracle-Gro (SMG - Free Report) , has gained 9.8% over the past month. More than a month has passed since the company reported results for the quarter ended December 2023.
Scotts reported revenues of $410.4 million in the last reported quarter, representing a year-over-year change of -22.1%. EPS of -$1.45 for the same period compares with -$1.02 a year ago.
Scotts is expected to post earnings of $3.24 per share for the current quarter, representing a year-over-year change of -14.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.8%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Scotts. Also, the stock has a VGM Score of C.