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CF Industries' (CF) Earnings & Sales Beat Estimates in Q1

CF Industries Holdings, Inc. CF delivered profits of $68 million or 31 cents per share in the first quarter of 2020, down from $90 million or 40 cents in the year-ago quarter. Nevertheless, earnings per share beat the Zacks Consensus Estimate of 23 cents.

Net sales fell around 3% year over year to $971 million in the quarter. However, the figure beat the Zacks Consensus Estimate of $891.3 million.

Average selling prices in the first quarter were lower on a year-over-year basis across all segments due to increased global supply availability. This was mostly offset by higher sales volumes across all segments.

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 rose 3.2% year over year to $193 million in the reported quarter. Ammonia sales volume rose year over year owing to comparatively favorable weather enabling fertilizer application. Average selling prices of ammonia fell year over year due to higher global ammonia supply availability.

Sales in the Granular Urea segment declined 1.7% year over year to $337 million. Sales volumes rose year over year but average selling prices for urea declined due to increased global supply availability as lower global energy costs led to rise in operating rates.

Sales in the UAN segment fell 8.2% year over year to $235 million. Sales volumes increased year over year but average selling prices declined in the quarter.

Sales in the AN segment declined 8.7% year over year to $116 million. Sales volumes rose year over year on the back of higher demand in North America and Europe. Average selling prices declined year over year due to increased global supply availability.

Financials

CF Industries’ cash and cash equivalents rose 12.2% year over year to $753 million at the end of the first quarter. Long-term debt was $3,958 million at the end of the quarter, down 15.8% year over year. 

Cash flow from operations amounted to $292 million in the reported quarter, down 4.6% year over year. The company repurchased around 2.6 million shares during the first quarter. Since February 2019, the company repurchased around 10.2 million shares for $437 million.

Outlook

CF Industries expects positive global nitrogen demand in the near term, driven by higher nitrogen-consuming planted corn and coarse grain acres in North America this year compared with 2019 levels. It projects 92-94 million acres of corn to be planted in the United States in 2020, lower than the U.S. Department of Agriculture’s projection of 97 million acres in March. 

CF Industries anticipates North American nitrogen production facilities to remain at the low-end of the global nitrogen cost curve in the near term. This will be supported by access to low-cost North American natural gas.

Price Performance

Shares of CF Industries have lost 37.2% in the past year compared with the industry’s 30.1% decline.



Zacks Rank & Key Picks

CF Industries currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, Barrick Gold Corporation GOLD and Franco-Nevada Corporation FNV, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 58.8% for 2020. The company’s shares have surged 55.1% in the past year.

Barrick has an expected earnings growth rate of 70.6% for 2020. Its shares have returned 111.2% in the past year.   

Franco-Nevada has an expected earnings growth rate of 22% for 2020. The company’s shares have surged 102.3% in the past year.

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CF Industries Holdings Inc (CF): Free Stock Analysis Report
 
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