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CF Industries (CF) to Report Q2 Earnings: What's in Store?

Zacks Equity Research
·4 mins read

CF Industries Holdings, Inc. CF is set to release second-quarter 2020 results on Aug 5, after the closing bell.

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

The company’s shares have lost 38.2% in the past year compared with the 25.3% decline of the industry.

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

Zacks Model

Our proven model predicts 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.

Earnings ESP: Earnings ESP for CF Industries is +12.44%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 61 cents and 54 cents, respectively. 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.

Factors at Play

Higher nitrogen fertilizer demand in major markets likely supported the company’s margins in the second quarter. Normal planting conditions are expected to have contributed to strong demand in North America. Moreover, demand conditions are likely to have remained favorable in Brazil and India in the June 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 first quarter of 2020. The trend is likely to have continued in the second quarter and might have boosted margins.

However, weak pricing is a concern. Greater global supply availability due to increased global operating rates affected prices in the first quarter. Moreover, lower global energy prices put pressure on product prices. Pricing weakness is likely to have continued in the second quarter. Lower nitrogen prices are likely to get reflected in the company’s second-quarter results.

What do the Estimates Indicate?

The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $1,145 million, which calls for a 23.8% decline year over year.

The Zacks Consensus Estimate for total sales for the Ammonia segment is currently pegged at $353 million, calling for a 25.4% fall on a year-over-year basis. The same for the Granular Urea segment currently stands at $333 million, which suggests a fall of 23.1% year over year.

The consensus mark for sales in the urea ammonium nitrate solution segment is currently pegged at $286 million, which suggests a decline of 22.5% year over year.

The Zacks Consensus Estimate for total sales in the ammonium nitrate segment is currently pegged at $83 million, which calls for a decline of 34.1% 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

Other Stocks to Consider

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

Barrick Gold Corporation GOLD, scheduled to release second-quarter 2020 earnings on Aug 10, has an Earnings ESP of +0.54% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

FMC Corporation FMC, slated to release second-quarter 2020 earnings on Aug 4, has an Earnings ESP of +1.13% and a Zacks Rank #3.

Pan American Silver Corp. PAAS, scheduled to release second-quarter 2020 results on Aug 5, has an Earnings ESP of +23.81% and carries a Zacks Rank #3.

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CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
 
FMC Corporation (FMC) : Free Stock Analysis Report
 
Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Pan American Silver Corp. (PAAS) : Free Stock Analysis Report
 
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