CF Industries Holdings, Inc. (NYSE:CF), which is in the chemicals business, and is based in United States, saw significant share price movement during recent months on the NYSE, rising to highs of US$51.34 and falling to the lows of US$44.95. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether CF Industries Holdings's current trading price of US$45.69 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at CF Industries Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is CF Industries Holdings still cheap?
According to my valuation model, CF Industries Holdings seems to be fairly priced at around 14% below my intrinsic value, which means if you buy CF Industries Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth $53.30, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, CF Industries Holdings’s low beta implies that the stock is less volatile than the wider market.
Can we expect growth from CF Industries Holdings?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. CF Industries Holdings’s earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.
What this means for you:
Are you a shareholder? It seems like the market has already priced in CF’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on CF, now may not be the most optimal time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on CF Industries Holdings. You can find everything you need to know about CF Industries Holdings in the latest infographic research report. If you are no longer interested in CF Industries Holdings, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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