uploads///CF Industries Valuation Multiple versus Peers

How Is CF Industries Valued prior to Its 2Q17 Earnings?


Nov. 20 2020, Updated 4:50 p.m. ET

CF’s valuation

It’s now time to look at what investors are paying for CF Industries (CF) prior to its 2Q17 earnings. Earlier in this series, we learned that CF Industries is expected to report negative EPS (earnings per share) in 2Q17. For this reason, we can’t use its forward PE (price-to-earnings multiple) to gauge its valuation.

Instead, we’ll use its EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple as a measure of its relative valuation.

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Forward EV-to-EBITDA

On July 21, 2017, CF Industries was trading at a forward EV-to-EBITDA multiple of 13.8x, higher than its low of 11.2x in March 2017 but much lower than its peak of 16.6x in January 2017.

Throughout most of 2016, the company’s valuation lagged those of its peers, including PotashCorp (POT), The Mosaic Company (MOS), and Agrium (AGU). It was recently trading above its peer median. On July 21, the peer median forward EV-to-EBITDA multiple of the above-mentioned companies was 11.8x.

Considering the valuation multiples of each of CF’s peers (MOO), we can see that PotashCorp is trading at 13.2x above the median, while Agrium is trading 10.2x below the median, and Mosaic is trading 10.4x below the median.

We’ll be publishing an analysis of CF Industries’ 2Q17 earnings as they happen. In the meantime, be sure to visit Market Realist’s Agricultural Fertilizers page.


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