CF Industries Holdings’s (CF) stock declined by 4% to $23.50 on August 4, 2016, in the pre-market trading session following its 2Q16 earnings release on August 3. The company reported adjusted EPS (earnings per share) of $0.33, which missed analyst estimates of $0.64 per share.
CF’s dismal performance
CF Industries’s stock has been on a downward trajectory since 2015, which is plotted against the quarterly adjusted earnings per share in the chart above. YTD (year-to-date), the company was still down, returning -27.6%, while the Materials Select Sector SPDR ETF (XLB), which has 12.7% of its portfolio in agricultural chemicals, was up with YTD returns of 20% YTD.
Terra Nitrogen (TNH), which is an MLP, has fared much better with a 6.5% return YTD. CF owns a majority stake in this company.
Fertilizer companies have generally underperformed benchmark indexes such as XLB and the S&P 500 Index (SPY), which has returned 12% YTD. Agricultural fertilizer companies PotashCorp (POT) and CVR Partners (UAN) returned 9.9% and 8.3% YTD on August 4. Intrepid Potash (IPI) was the worst performer and fell by 48% YTD.
In this earnings analysis series, we’ll explore CF Industries’s key performance metrics in 2Q16. We’ll also discuss the key drivers of the company’s quarterly performance and look at its management’s outlook and guidance for the upcoming quarters.
Let’s begin with CF Industries’s sales in 2Q16.