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CF Industries (CF) Hits New 52-Week High: What's Driving It?

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CF Industries (CF) Hits New 52-Week High: What's Driving It?

Upbeat outlook for nitrogen demand and pricing has contributed to the rally in CF Industries'(CF) shares.

Shares of CF Industries Holdings, Inc. CF scaled a fresh 52-week high of $51.80 on Aug 29, before closing the session at $51.64.

CF Industries has a market cap of roughly $12 billion and its average volume of shares traded in the last three months was around 2,708.3K. The company has an expected long-term earnings per share growth rate of 6%.

CF Industries’ shares have gained 25.6% in the last three months, significantly outperforming the industry’s growth of 7%.



Driving Factors

A better-than-expected performance in the second quarter along with upbeat outlook for nitrogen demand and pricing has contributed to the rally.
 
The company’s profit surged in the second quarter to $148 million or 63 cents per share from $3 million or a penny a year ago. Earnings also beat the Zacks Consensus Estimate of 42 cents.

CF Industries benefits from higher nitrogen demand driven by healthy corn plantations and cyclical recovery in the nitrogen fertilizer industry. The company expects strong demand in Brazil through the remainder of 2018. It sees a year-over-year increase in urea imports to Brazil during the second half of 2018.
 
Higher production costs across Europe and China coupled with reduced production due to the enforcement of environmental regulations in China tightened global nitrogen supply and demand balance and boosted nitrogen prices during first-half 2018. These factors are expected to continue to drive prices in the third quarter. The company also expects demand in Brazil and India to support global nitrogen prices through the balance of 2018.

Earnings estimates for CF Industries have also moved north over the past month. Over this period, the Zacks Consensus Estimate for 2018 has increased by around 37% to $1.37. The Zacks Consensus Estimate for 2019 has also moved up 6.5% over the same timeframe to $1.80.
 
The Zacks Consensus Estimate for 2018 earnings reflects an expected year-over-year growth of a staggering 648%. For 2019, earnings are expected to rise 31.7% year over year.
 

CF Industries Holdings, Inc. Price and Consensus

CF Industries Holdings, Inc. Price and Consensus | CF Industries Holdings, Inc. Quote

Zacks Rank & Stocks to Consider

CF Industries is a Zacks Rank #3 (Hold) stock.

Some better-ranked companies in the basic materials space are Huntsman Corp. HUN, Celanese Corp. CE and Air Products and Chemicals, Inc. APD.

Huntsman has an expected long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). Shares of the company have gained 20% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Celanese has an expected long-term earnings growth rate of 10% and carries a Zacks Rank #1. The stock has rallied 20.8% in a year.

Air Products has an expected long-term earnings growth rate of 16.1% and a Zacks Rank #2 (Buy). Shares of the company have risen 15.8% in a year’s time.

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