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CF Industries Shares Surge 28% in 3 Months: What's Driving the Stock?
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Key Takeaways
CF shares surged 28% in the past three months, outpacing its industry.
Global nitrogen demand and higher selling prices boosted CF's Q1 revenue by nearly 13%.
CF repurchased $434M in shares in Q1 and launched a new $2B buyback program through 2029.
CF Industries Holdings, Inc.’s (CF - Free Report) shares have popped 28% over the past three months. The company has also outperformed the industry’s 18.9% rise and the S&P 500’s roughly 15.7% increase over the same period.
Image Source: Zacks Investment Research
Let’s take a look at the factors that are driving this fertilizer maker.
CF Rides Strong Nitrogen Demand and Pricing Tailwinds
CF Industries is capitalizing on the growing global demand for nitrogen fertilizers, fueled by strong agricultural activity. After pandemic-related challenges, industrial demand for nitrogen has recovered.
On its first-quarter earnings call, CF Industries projected that the global supply-demand dynamics for nitrogen would remain favorable in the near term. This outlook is supported by strong demand driven by the global corn stocks-to-use ratio hitting its lowest point since 2013, along with weak production economics in Europe.
In North America, CF anticipates strong nitrogen demand during the spring planting season, as corn offers higher returns than soybeans, leading to an expected increase in corn acreage by 2025. In Brazil, nitrogen imports are expected to remain elevated due to expanding corn production and limited domestic nitrogen manufacturing. Meanwhile, in India, rising local demand is likely to keep urea inventories low, prompting the need for additional imports this year to meet farmer requirements and rebuild reserves.
CF Industries continues to focus on enhancing shareholder value by utilizing its strong cash flow. In the first quarter, the company generated $586 million in net cash from operating activities, marking an increase of approximately 32% from the previous year. During the same period, CF repurchased 5.4 million shares for $434 million. As of the end of the quarter, around $630 million remained under the existing $3 billion share buyback program. Additionally, the board of directors has approved a new $2 billion share repurchase program, set to run through 2029.
Rising nitrogen prices have contributed to a boost in CF Industries’ revenue. In the first quarter, net sales rose nearly 13% year over year to $1,663 million. The average selling prices for most of the company’s core products increased compared to the prior year, driven by higher global energy costs, which elevated the market-clearing prices needed to satisfy global demand. Looking ahead, CF is expected to continue benefiting from favorable pricing trends.
Better-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) and Avino Silver & Gold Mines Ltd. (ASM - Free Report) .
Carpenter Technology currently carries a Zacks Rank #2 (Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 11.1%. The company's shares have soared 43.3% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $1.61 per share. AEM, carrying a Zacks Rank #1 (Strong Buy), surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 12.3%. The company's shares have rallied 74.4% in the past year.
Avino Silver, which currently carries a Zacks Rank #1, beat the consensus estimate in each of the trailing four quarters. In this time frame, it delivered an earnings surprise of roughly 104.1%, on average. ASM's shares have rallied 330% in the past year.
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CF Industries Shares Surge 28% in 3 Months: What's Driving the Stock?
Key Takeaways
CF Industries Holdings, Inc.’s (CF - Free Report) shares have popped 28% over the past three months. The company has also outperformed the industry’s 18.9% rise and the S&P 500’s roughly 15.7% increase over the same period.
Image Source: Zacks Investment Research
Let’s take a look at the factors that are driving this fertilizer maker.
CF Rides Strong Nitrogen Demand and Pricing Tailwinds
CF Industries is capitalizing on the growing global demand for nitrogen fertilizers, fueled by strong agricultural activity. After pandemic-related challenges, industrial demand for nitrogen has recovered.
On its first-quarter earnings call, CF Industries projected that the global supply-demand dynamics for nitrogen would remain favorable in the near term. This outlook is supported by strong demand driven by the global corn stocks-to-use ratio hitting its lowest point since 2013, along with weak production economics in Europe.
In North America, CF anticipates strong nitrogen demand during the spring planting season, as corn offers higher returns than soybeans, leading to an expected increase in corn acreage by 2025. In Brazil, nitrogen imports are expected to remain elevated due to expanding corn production and limited domestic nitrogen manufacturing. Meanwhile, in India, rising local demand is likely to keep urea inventories low, prompting the need for additional imports this year to meet farmer requirements and rebuild reserves.
CF Industries continues to focus on enhancing shareholder value by utilizing its strong cash flow. In the first quarter, the company generated $586 million in net cash from operating activities, marking an increase of approximately 32% from the previous year. During the same period, CF repurchased 5.4 million shares for $434 million. As of the end of the quarter, around $630 million remained under the existing $3 billion share buyback program. Additionally, the board of directors has approved a new $2 billion share repurchase program, set to run through 2029.
Rising nitrogen prices have contributed to a boost in CF Industries’ revenue. In the first quarter, net sales rose nearly 13% year over year to $1,663 million. The average selling prices for most of the company’s core products increased compared to the prior year, driven by higher global energy costs, which elevated the market-clearing prices needed to satisfy global demand. Looking ahead, CF is expected to continue benefiting from favorable pricing trends.
CF Industries Holdings, Inc. Price and Consensus
CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote
CF’s Zacks Rank & Key Picks
CF currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the basic materials space include Carpenter Technology Corporation (CRS - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) and Avino Silver & Gold Mines Ltd. (ASM - Free Report) .
Carpenter Technology currently carries a Zacks Rank #2 (Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 11.1%. The company's shares have soared 43.3% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Agnico Eagle’s current-year earnings is pegged at $1.61 per share. AEM, carrying a Zacks Rank #1 (Strong Buy), surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with an average earnings surprise of 12.3%. The company's shares have rallied 74.4% in the past year.
Avino Silver, which currently carries a Zacks Rank #1, beat the consensus estimate in each of the trailing four quarters. In this time frame, it delivered an earnings surprise of roughly 104.1%, on average. ASM's shares have rallied 330% in the past year.