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CF Industries (CF) to Post Q3 Earnings: What's in the Cards?

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CF Industries Holdings, Inc. CF is set to release third-quarter 2020 results on Nov 4, after the closing bell.

The company’s third-quarter results are likely to reflect the benefits of higher demand for nitrogen fertilizers and lower natural gas costs. However, lower prices might have affected margins in the to-be-reported quarter.

The company’s shares have lost 42% in the past year compared with 9.7% decline of the industry.

Let’s see how things are shaping up for this announcement.

Factors at Play in Q3

In second-quarter 2020, CF Industries stated that it expects global nitrogen demand to remain positive in the second half of 2020 and into 2021. Global nitrogen requirements are driven by demand in India and Brazil. Demand for urea imports into Brazil remains favorable. This is partly supported by improved farm incomes. The company expects total urea imports into Brazil to surpass 6.5 million metric tons in 2020. As such, higher nitrogen fertilizer demand in major markets is likely to have supported the company’s margins in the third quarter.

Lower natural gas costs also have been an advantage for the company. It is enjoying the benefits of access to low cost and abundant North American natural gas supply. The company witnessed lower year-over-year natural gas costs in the second quarter of 2020. The trend is likely to have continued in the third quarter and might have boosted margins.

However, weak nitrogen pricing is a concern. Greater global supply availability due to increased global operating rates affected prices in the second quarter. Moreover, lower global energy prices put pressure on product prices. As such, pricing weakness is likely to have continued in the third quarter and impacted performance.

What do the Estimates Indicate?

The Zacks Consensus Estimate for CF Industries' third-quarter total sales is currently pegged at $895 million, which calls for 13.8% decline year over year.

The Zacks Consensus Estimate for total sales for the Ammonia segment is currently pegged at $167 million, calling for a 10.7% fall on a year-over-year basis. The same for the Granular Urea segment currently stands at $297 million, which suggests a fall of 9.2% year over year.

The consensus mark for sales in the urea ammonium nitrate solution segment is currently pegged at $264 million, which suggests a decline of 14.6% year over year.

The Zacks Consensus Estimate for total sales in the ammonium nitrate segment is currently pegged at $131 million, which calls for a decline of 3.7% year over year.

CF Industries Holdings, Inc. Price and EPS Surprise

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

CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote

Zacks Model

Our proven model does not predict an earnings beat for CF Industries this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That’s not the case here.

Earnings ESP: Earnings ESP for CF Industries is 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are both currently pegged at 5 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CF Industries currently carries a Zacks Rank #4 (Sell).

Stocks Likely to Beat Estimates

Here are some companies that you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Olin Corporation OLN, scheduled to release third-quarter 2020 earnings on Nov 4, has an Earnings ESP of +16.67% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Albemarle Corporation ALB, scheduled to release third-quarter 2020 earnings on Nov 4, has an Earnings ESP of +5.73% and carries a Zacks Rank #3.

Domtar Corporation UFS, slated to release third-quarter 2020 earnings on Nov 6, has an Earnings ESP of +57.14% and carries a Zacks Rank #3.

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CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
 
Albemarle Corporation (ALB) : Free Stock Analysis Report
 
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