CF Industries (CF) to Post Q3 Earnings: What's in Store?
CF Industries Holdings, Inc. CF is set to release third-quarter 2021 results on Nov 3, after the closing bell.
The company’s third-quarter results are likely to reflect the benefits of higher nitrogen prices and increased demand. However, high natural gas costs are likely to have affected margins in the to-be-reported quarter.
CF Industries beat the Zacks Consensus Estimate for earnings in two of the trailing four quarters while missing the same twice. The company has a trailing four-quarter earnings surprise of 8.1%, on average. The company posted a negative earnings surprise of 30.5% in the last reported quarter.
Shares of CF Industries have gained 102.4% in the past year compared with 64.4% rise of the industry.
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Let’s see how things have shaped up for this announcement.
What Do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' third-quarter total sales is currently pegged at $1,427 million, which indicates 68.5% increase year over year.
The Zacks Consensus Estimate for total sales in the Ammonia segment is currently pegged at $283 million, implying a 71.5% rise on a year-over-year basis. The same for the Granular Urea segment is $379 million, which suggests an increase of 52.2% year over year.
The consensus mark for sales of the urea Ammonium Nitrate Solution segment is currently pegged at $459 million, which suggests an increase of 85.1% year over year.
The Zacks Consensus Estimate for total sales of the Ammonium Nitrate segment is currently pegged at $148 million, which indicates an increase of 35.8% year over year.
Factors at Play in Q3
CF Industries is likely to have benefited from higher nitrogen fertilizer demand in major markets in the third quarter. Global nitrogen demand is expected to have remained strong driven by strong crop commodity prices. Industrial demand recovered from the pandemic-related disruptions. Higher economic activities are likely to have contributed to higher industrial consumption of nitrogen products.
Strong nitrogen demand driven by higher commodity crop futures prices as well as higher nitrogen prices are likely to have aided the company’s margins in the third quarter. Nitrogen prices are likely to have been driven by lower global supply availability resulting from reduced operating rates across Europe and Asia.
The company is also likely to have gained from continued strong demand for urea imports from Brazil and India. Higher crop prices, increased planted corn acres and improved farm economics have been supporting demand in Brazil.
However, higher natural gas costs partly due to an increase in natural gas costs in the U.K. are likely to have increased cost of sales and impacted the company’s margins in the third quarter.
Zacks Model
Our proven model does not conclusively 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. But that’s not the case here.
Earnings ESP: Earnings ESP for CF Industries is -4.37%. The Zacks Consensus Estimate is currently pegged at 97 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 #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote
Stocks That Warrant a Look
Here are some companies in the basic materials space you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
B2 Gold Corp. BTG, scheduled to release earnings on Nov 2, has an Earnings ESP of +0.53% and carries a Zacks Rank #3.
The Chemours Company CC, scheduled to release earnings on Nov 4, has an Earnings ESP of +1.26% and carries a Zacks Rank #2.
Albemarle Corporation ALB, scheduled to release earnings on Nov 3, has an Earnings ESP of +8.73% and carries a Zacks Rank #3.
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