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CF Industries Rises in 2Q15

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Sep. 11 2015, Published 8:48 a.m. ET

CF Industries’s performance

One of the major players in the fertilizer industry, CF Industries (CF) has returned 1.43% year-to-date, with the stock trading at $55.50 as of September 6, 2015. In the nitrogen-based segment, Terra Nitrogen (TNH) has returned 5.8% and CVR Partners (UAN) has returned 23% year-to-date. Among other fertilizer companies, Mosaic (MOS) has fallen 14%, PotashCorp (POT) has fallen 29%, and Agrium (AGU) has risen 4.3%. VanEck Vectors Agribusiness ETF (MOO) has fallen 8% year-to-date.

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2Q15 earnings

  • CF Industries released its 2Q15 earnings on August 5, 2015, with earnings per share of $1.49. This beat analysts’ estimate of $1.45 by 2.7%.
  • Shares rose 2.3% the next day after the earnings were released. However, since then the stock has fallen almost 12% as of September 6.

In this series, we’ll cover some of the key points of the earnings report and how the company is strategically transforming its business. We’ll then look at CF’s valuation at the end of this series.

Company overview

Nitrogen fertilizers are critical in helping farmers produce a better crop and increase yield. Playing an important role in this sector is CF Industries, which is one of the largest producers and distributors of nitrogen-based fertilizers such as urea, ammonia, and urea ammonium nitrate, or UAN.

CF Industries currently has six manufacturing facilities, of which four are in the United States and two are in Canada. CF holds 75.4% interest in publicly traded limited partnership Terra Nitrogen (TNH). It also has 50% interest in distinct joint ventures located in the United Kingdom and Trinidad and Tobago.

Bear in mind that the company sold off its phosphate business division to Mosaic in the first quarter of 2014. During 2Q15, CF acquired the remaining 50% of the UK venture known as GrowHow.

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