CF Industries Holdings, Inc.’s CF shares have gained 26% up to now three months, outperforming the Zacks Fertilizers industry’s rise of 4.7%. CF advantages from greater nitrogen fertilizer demand in main markets and decrease pure fuel prices.
Technical indicators present that CF has been unremittingly buying and selling above the 50-day easy transferring common (SMA) since early August 2024. CF additionally reached a key technical milestone, with the 50-day SMA crossing above the 200-day SMA on Sept. 24, 2024, signaling an uptrend.
CF Inventory Trades Above 50-Day SMA
Picture Supply: Zacks Funding Analysis
Is the time proper to purchase CF’s shares for potential upside? Let’s check out the inventory’s fundamentals.
CF Good points on Wholesome Nitrogen Demand & Decrease Gasoline Prices
CF Industries is benefiting from the rising world demand for nitrogen fertilizers, pushed by important agricultural demand. Industrial demand for nitrogen has additionally recovered from the pandemic-related disruptions. International demand is predicted to stay sturdy within the close to future because of recovering industrial demand and farmer economics.
Excessive ranges of corn planted acres and low nitrogen channel inventories are anticipated to drive demand for nitrogen in North America. Demand for urea can be more likely to stay sturdy in Brazil and India. Demand in India is predicted to be pushed by an uptick in home manufacturing because of greater working charges and favorable climate circumstances.
CF, on its second-quarter name, mentioned that it anticipates the worldwide supply-demand steadiness to stay constructive over the close to time period, pushed by nitrogen import necessities for Brazil and India till the tip of the yr, in addition to sustained broad vitality spreads between North America and high-cost manufacturing in Europe.
CF additionally stands to profit from decrease pure fuel costs. It witnessed a decline in pure fuel prices within the second quarter of 2024. The common price of pure fuel fell to $1.90 per MMBtu within the quarter from $2.75 per MMBtu within the year-ago quarter. Decrease pure fuel prices led to a decline within the firm’s price of gross sales. The advantages of decreased fuel prices are anticipated to proceed within the third quarter.
CF Industries Stays Centered on Capital Allocation
CF stays dedicated to boosting shareholders’ worth by leveraging sturdy money flows. The corporate repurchased 8.3 million shares for $652 million within the first half of 2024, together with 4 million shares for $305 million within the second quarter. CF generated web money from working actions of $475 million within the second quarter and ended the quarter with money and money equivalents of roughly $1.8 billion.
The present $3 billion share repurchase program had round $1.9 billion remaining on the finish of the second quarter. CF returned $832 million by dividends and share repurchases throughout first-half 2024. Earlier this yr, the corporate additionally introduced a 25% enhance in quarterly dividend to 50 cents per share.
CF gives a dividend yield of two.3% (above the S&P 500′s common dividend yield of roughly 2%) on the present inventory value. Its payout ratio is 35% (a ratio beneath 60% is an effective indicator that the dividend will probably be sustainable) with a five-year annualized dividend development fee of 11.6%. Backed by sturdy monetary well being, the corporate’s dividend is perceived to be secure and dependable.
CF Industries’ Earnings Estimates Going Up
The Zacks Consensus Estimate for 2024 for CF has been revised upward over the previous 60 days. The consensus estimate for the third quarter of 2024 has additionally been revised greater over the identical timeframe.
Discover the newest EPS estimates and surprises on Zacks Earnings Calendar.
Picture Supply: Zacks Funding Analysis
CF’s Inventory Valuation Appears Stretched
CF Industries is at the moment buying and selling at a ahead 12-month earnings a number of of 15.47X, a roughly 16.3% premium to the peer group common of 13.3X, and better than its five-year median.
Picture Supply: Zacks Funding Analysis
CF Inventory Outperforms Trade
CF’s shares have gained 10.9% yr so far, outperforming the business’s 12.6% decline whereas underperforming the S&P 500’s rise of 20%. Its main fertilizer friends, The Mosaic Firm MOS, Nutrien Ltd. NTR and Intrepid Potash, Inc. IPI have misplaced 24.2%, 11.5% and 0.5%, respectively, over the identical interval.
CF’s YTD Inventory Value Efficiency
Picture Supply: Zacks Funding Analysis
Closing Ideas: Purchase CF Shares
CF presents a compelling funding case backed by favorable demand fundamentals and rising earnings estimates. It’s well-positioned to capitalize on the rising nitrogen fertilizer demand in main markets aided by supportive agricultural fundamentals. Decrease pure fuel costs additionally act in its favor. The corporate’s stable monetary well being additionally permits it to drive shareholder worth. We suggest that traders add this Zacks Rank #2 (Purchase) inventory because it has upbeat prospects.
You possibly can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
The Mosaic Company (MOS) : Free Stock Analysis Report
Intrepid Potash, Inc (IPI) : Free Stock Analysis Report
Nutrien Ltd. (NTR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the creator and don’t essentially replicate these of Nasdaq, Inc.
