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CF Industries' (CF) Earnings Top, Sales Miss Estimates in Q4

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CF Industries Holdings, Inc. CF reported a profit of $705 million or $3.27 per share in the fourth quarter of 2021 compared with $87 million or 40 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share (EPS) was $3.71. The bottom line topped the Zacks Consensus Estimate of $3.41.

Net sales increased 130.5% year over year to $2,540 million in the quarter. However, the figure missed the Zacks Consensus Estimate of $2,594.4 million.

CF Industries Holdings, Inc. Price, Consensus and EPS Surprise

CF Industries Holdings, Inc. Price, Consensus and EPS Surprise
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 increased 161% year over year to $778 million in the reported quarter. Fourth-quarter sales volume increased from the prior year’s levels. Average selling prices in the fourth quarter increased year over year.

Sales in the Granular Urea segment increased 98.8% year over year to $662 million. Average selling prices for urea increased while sales volume declined in the quarter.

Sales in the UAN segment surged 169% year over year to $732 million. Sales volume in the fourth quarter were down from prior year’s levels. Average selling prices increased in the quarter.

Sales in the AN segment increased 34.8% year over year to $151 million. In the fourth quarter, sales volume declined year over year while average selling prices increased.

FY21 Results

Earnings (as reported) for full-year 2021 were $4.24 per share compared with $1.47 a year ago. Net sales increased 58.5% year over year to roughly $6,538 million.

Financials

CF Industries’ cash and cash equivalents increased 138.4% year over year to $1,628 million at the end of the year. Long-term debt was $3,465 million at the end of the year, down 6.7% year over year.

Cash flow from operations amounted to $2.87 billion in the year, up 133.4% year over year. The company repurchased around 7.5 million shares for $490 million during the fourth quarter.

Outlook

CF Industries expects global nitrogen supply and demand balance to remain tight in the foreseeable future. The company anticipates the commercial environment to be highly favorable for producers in low-cost regions in 2022.

The company forecasts global nitrogen inventory to be low after a year of strong demand and lower production led by the impact of energy-related production restrictions and shutdowns in Europe, weather-related disruptions in North America and stagnant production levels in countries including India. The elevated energy prices in Europe and Asia, along with ongoing restrictions on exports of certain nitrogen products from Russia, Egypt, Turkey and China, indicate global nitrogen supply will continue to be challenged, the company noted.

The global demand for nitrogen is projected to be strong. Higher economic activity continues to drive strong demand for diesel exhaust fluid for emissions abatement as well as ammonia, urea and nitric acid for industrial uses.

Price Performance

Shares of CF Industries have surged 60.3% in the past year compared with a 23.1% rise of the industry.

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Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Albemarle Corporation ALB, Nutrien Ltd. NTR and AdvanSix Inc. ASIX.

Albemarle, currently sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 56.2% for the current year. The Zacks Consensus Estimate for ALB's earnings for the current year has been revised 8.9% upward in the past 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 22.1%. ALB has rallied around 53.2% over a year.

Nutrien, sporting a Zacks Rank #1, has a projected earnings growth rate of 55.8% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 13.2% upward in the past 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters, while missing once. It has a trailing four-quarter earnings surprise of roughly 73.5%, on average. NTR has rallied around 33.2% in a year.

AdvanSix has a projected earnings growth rate of 7.4% for the current year. The Zacks Consensus Estimate for ASIX’s current-year earnings has been revised 5.3% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has surged 51.6% over a year. The company carries a Zacks Rank #2 (Buy).


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