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What's in the Cards for CF Industries' (CF) Q2 Earnings?

Zacks Equity Research

CF Industries Holdings, Inc. CF is set to release second-quarter 2019 results on Jul 31, after market close.

The stock has gained 9.6% in the past year against the industry’s 8.4% decline.



Factors at Play in Q2

In May, CF Industries announced that it expects strong nitrogen fertilizer demand in North America during the first half of 2019. Cold and wet weather affected first-quarter results and persisted in the second quarter, which delayed spring fertilizer applications throughout North America.

Per the company, throughout the first quarter and into May, weather conditions caused considerable disruptions to rail and barge transportation. It anticipates the logistical challenges to support strong in-region nitrogen pricing in the spring application season.

The company also stated that prompt urea barges in Orleans is seeing high demand. In anticipation of higher demand, it has leveraged Donaldsonville logistics flexibility by railing urea into the upper Midwest. Per the company, these factors will enable it capture higher prices across most segments in the second quarter on a year-over-year basis.

What do the Estimates Indicate?

The Zacks Consensus Estimate for CF Industries' second-quarter total sales is currently pegged at $1,373 million, which calls for a rise of roughly 5.6% from the year-ago quarter’s figure.

For the second quarter, the Zacks Consensus Estimate for total sales in the Ammonia segment is currently pegged at $287 million, which indicates a decline of 23.3% year over year.

The Zacks Consensus Estimate for total sales in the Granular Urea segment is currently pegged at $452 million, which suggests a rise of 25.6% year over year.

The consensus mark for sales in the urea ammonium nitrate solution (“UAN”) segment is currently pegged at $373 million, which indicates a rise of nearly 10% year over year.

Moreover, the Zacks Consensus Estimate for total sales in the ammonium nitrate (AN) segment is currently pegged at $147 million, which suggests a rise of 18.5% year over year.

What the Zacks Model Says?

Our proven model does not show that CF Industries is likely to beat estimates in the to-be-reported quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for CF Industries is -4.29%. The Most Accurate Estimate and Zacks Consensus Estimate are currently pegged at 77 cents and 81 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, which when combined with a negative ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

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

 

Stocks Poised to Beat Estimates

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

Barrick Gold Corporation GOLD has an Earnings ESP of +0.70% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology Corporation CRS has an Earnings ESP of +0.27% and carries a Zacks Rank #3.

Covia Holdings Corporation CVIA has an Earnings ESP of +20.00% and a Zacks Rank #3.

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CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
 
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Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
 
COVIA HOLDINGS (CVIA) : Free Stock Analysis Report
 
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