Captain--Most Analysts just assume an impute cost period. Good ones look at each plant if there are major plants like CF plant at TNH.. Look at UAN, a CVR entitly. They use coke, a refinery byproduct as their major feedstock--and they factor in what they believe to be net cost. ONLY SEC IMHO wants to see deviatives, CF is just concern with net costs. Basically when price goes up on Nat Gas during Q they make money in that dereviative segment, when it goes down they lose money there but make up for lose in the pure buy segment. CF ties their net costs into their selling price analysis--By now Aug 7 they know what they costs is for this 3Q within 5% because 95% already bought or hedged, which is same thing. Reaflare
Captain--BTW--I agree with re Wilson's attitude on Conference Calls, he always has played his cards very, very close to his chest--very different than other CEO's. Seems to always worry about people knowing what he is up to. He never volunters info--like his comment on when and what returns on his brownfield projects beside saying "attractive".
OK thanks for that but, again, the question is: DID the analysts include the profit or loss of CF's nat. gas derivatives in their estimates (not SHOULD THEY) and if so, how did they know that before the earnings report? Same goes for other unknowable (to the analysts) one time items.
By the way, I'll be willing to accept at some point the possibility that the market has rubber stamped the quarter as a good one, mystifying or not. Regardless of whether it was or not, the market's sentiment and forward outlook is what matters.
Captain--I don't know who you are replying to. If me and you have specific questions re my post then just put an address name. One time items re dereviatives are just a cost of acquiring the major feedstock which is Nat Gas which makes up 82-88% of costs, depending on what company. Companies operating margins vary because the cost of gas is very different in Trinada (big plant for POT) vs POT's Finley Ohio plant, and I am sure CF's costs different a tad from one of it's 7 North America plants. SEC just requires dereviative discloses but really cost of acquisition. 2. Forget amortization-it's peanuts. 3.Buying back shares is real,like buy an interest in all of there 7 plants. So $9.31 a big time earnings beat, esp over last year!! My guess, they will have big beats year over year for 3Q and 4Q, unless Congress states no more ethanol need for gasoline additive,(it is probably a lot better to use nat gas directly to cars than to use so much Nat Gas make fertilizer, then grow corn with it, then send corn to ethanol plant, then to blending refineries to add to gasoline. IMHO that will eventually happen, but we will all have fair notice and probably years away. Reaflare
Chris Damas on Seeking Alpha is an excellent source of information concerning CF and he had an excellent article a few quarters ago where he discussed why profits and losses due to CF hedging natural gas must always be included in the EPS figure and why one time items like the sale of a warehouse is never included. I anticipate he may touch on this topic in his next article.
I am surprised too that the CF share price did not run up by 10% today, but we all know that this stock is institutionally controlled and most require a little pondering and time to accumulate their position while a few rely on a little trickery to obtain a favorable entry point.
So were the profit/loss from CF's nat. gas derivatives included? You say you would expect it, but how would they possibly know it? And what about that amortization issue? How could they have known about that until the earnings release? They may have had a way of factoring in the reduction in float. I honestly don't know if that info. was available prior to earnings release (probably was). The question is....Did they? I freely admit I don't know lots of things, however after reading your posts for some months I have come to expect you to know everything.
PS: If you don't know the answer maybe you didn't listen to the CC because ALL things were revealed there (LOL)
Grad--LOL--Have no idea why it was strong sell button!!! It will be changed here on this post. I am LONG CF. 2 yrs ago it was very unclear how low Nat gas would go, and both China and Brazil were talking about hugh increases in production--And many in Trinada thought they could supply USA, but they had their price of gas imput costs tied to Ammonia prices in Tampa--not a good thing for them today. VERY risky long 2 years ago.. Most people thought Nat Gas would stay in the $4-6 range and corn in the $4-6 bushel range. We were wrong in conclusion (not thought process LOL) So today I see very little risk next 4-5 Q's for CF and see little chance of being wrong, but anything could happen in this world.. Longer term, I know you are smart enough to know that instead of using Nat Gas (and the CO2 as a operating results), we should be using that gas directly to autos and trucks and thereby reducing CO2 big time on a net basis. Eventually somebody will be smart enough in Wash to figure that out. In the meantime, and certainly before new production comes on stream, I expect CF fo have 4-8 great quarters.
Captain, all companies and their nitrogen segements hedge monthly, CF hedged 60% for next 6 mmonths. That item is really just a part of the normal imput costs and should just be factored into operating margins. The $9.31 was a hugh positive--last Q results and CC and trading shortly thereafter left people nervous about a bumper crop which would have brought corn down to $5-6 ranged, nobody in late April/May could have anticpated drought and corn being above $8 today. Frankly, I am surprised that CF not up 10% today. They will forward sell a ton next 2 Q's for 1 and 2Q next year. The farmers have the money, trust me on that. Good luck--and let's try to have meaningful thoughtful posts.
I would expect news media sites to report correct EPS figures including the number of outstanding shares once the figures are released by the company. Especially when that factors in to a difference of a hit or miss.
As far as analysts are concerned, they seem to be on the ball pushing CF estimates from the Q2 2011 $5.95 up to $8.21 for Q2 2012 three months ago and then up to $8.90 last week.
Thanks for your post, I can tell you're very knowledgeable. I still say that those one time items have to be excluded to compare with the analysts estimates, which do not and cannot include them. For comparing the current quarter to same quarter last year, though, they should be included.