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CF Industries (CF) to Post Q3 Earnings: Is a Beat in Store?

Zacks Equity Research

CF Industries Holdings, Inc. CF is set to release third-quarter 2019 results on Oct 30, after market close. The company’s third-quarter performance is likely to have benefited from higher prices of nitrogen fertilizers and robust urea demand from key global markets. 

The stock has gained 3% in the past year against the industry’s 10% decline.



What the Zacks Model Says

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 earning beat. That is the case here, as you will see below:

Earnings ESP: Earnings ESP for CF Industries is +6.11%. The Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 37 cents and 34 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 #2.

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

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Factors at Play in Q3

In August, CF Industries said that it expects ammonia production to be sequentially lower in the third quarter. The company witnessed the heaviest period of planned maintenance during the third quarter, which is expected to have impacted production levels.  

The company’s third-quarter results may show the benefits of higher prices of nitrogen fertilizers. Tighter global nitrogen supply and demand balance are driving nitrogen prices.

Additionally, lower natural gas prices have been an advantage for the company. Its nitrogen business is enjoying the benefit of abundant natural gas supply, driven by higher production of North American shale gas. Lower natural gas costs are expected to have supported third-quarter margins.

Also, urea demand from Brazil and India continues to be robust. The company’s third-quarter results are likely to reflect the impact of higher demand across these major markets.

Q3 Expectations

The Zacks Consensus Estimate for CF Industries' third-quarter total sales is currently pegged at $1,069 million, which calls for a rise of nearly 2.8% from the year-ago quarter’s tally.

For the third quarter, the Zacks Consensus Estimate for total sales in the Ammonia segment is currently pegged at $198 million, which indicates a rise of 3.1% year over year. 

The Zacks Consensus Estimate for total sales in the Granular Urea segment is currently pegged at $399 million, which suggests a rise of 13% year over year.

The consensus mark for sales in the urea ammonium nitrate solution (UAN) segment is currently pegged at $303 million, which indicates a rise of nearly 12.2% year over year.

Moreover, the Zacks Consensus Estimate for total sales in the ammonium nitrate (AN) segment is currently pegged at $152 million, which suggests a rise of 9.4% year over year.

Other Stocks Poised to Beat Estimates

Here are some other companies in the basic materials space 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:

Franco-Nevada Corporation FNV has an Earnings ESP of +0.34% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here

Kinross Gold Corporation GOLD has an Earnings ESP of +2.50% and carries a Zacks Rank #1.

LyondellBasell Industries N.V. LYB has an Earnings ESP of +1.26% and carries a Zacks Rank #3.

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LyondellBasell Industries N.V. (LYB) : Free Stock Analysis Report
 
CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
 
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Franco-Nevada Corporation (FNV) : Free Stock Analysis Report
 
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