Why Wall Street Expects CF’s Revenues to Fall in 4Q15
What to Expect of CF Industries' 4Q15 Earnings
Revenue
After the sale of CF Industries’s (CF) phosphate division to Mosaic (MOS), CF is left primarily with its nitrogen fertilizer segment. This segment combines sales from ammonia, urea, UAN, and other segments, including ammonium nitrate, urea liquor, diesel exhaust fluid, and aqua ammonia.
The Market Vectors Agribusiness ETF (MOO) invests 18.4% of its holdings in CF, Mosaic, Agrium (AGU), and PotashCorp (POT).
Revenue expectations
For the upcoming 4Q15 earnings release, Wall Street analysts are expecting CF to report revenue of $1.1 billion, which would be 11% less than the $1.2 billion of 4Q14. For the next 12 months, analysts are forecasting that the company will report revenue of $4.7 billion, an increase from $4.4 billion in the last 12 months. This forecast would mean revenue growth of 7% year-over-year.
Granular urea, which is one of the most common nitrogen fertilizers in the world, has contributed to most of the revenue decline in 3Q15. Chinese exporters flooding the market with urea have created constant pressure on nitrogen fertilizer companies, and this pressure reflects in their revenue performance. If you look at the chart carefully, you can see that most of the revenue growth is forecasted to take place in the second half of 2016.
We’ll discuss what we believe analysts foresee in the market, but let’s first look at the expectations around nitrogen shipments in the next part of this series.
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