uploads///CF Industries Next  Month EBITDA and Margin Estimates

Expect CF Industries’ 2Q17 Operating Margin to Move Sideways


Jul. 25 2017, Updated 10:41 a.m. ET

Operating margins

Earlier, we learned that CF Industries’ (CF) gross margin is expected to contract year-over-year (or YoY) in 2Q17. 

However, when we look at its adjusted operating margin, or its EBITDA (earnings before interest, tax, depreciation, and amortization) margin, we see that analysts expect more stability YoY in 2Q17.

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Analysts’ estimates

Wall Street analysts expect CF Industries to report $312 million in adjusted EBITDA in 2Q17, which would translate into an EBITDA margin of 29% on expected revenue of $1.1 billion.

When we compare this to 2Q16, we can see that CF’s EBITDA margin is expected to contract slightly from 30%. On the other hand, over the next four quarters, analysts expect CF Industries’ EBITDA margin to expand from 22.3% to 26.6% YoY.

Peer comparison

Over this period, The Mosaic Company (MOS) is expected to report an adjusted EBITDA margin of 17.2%, an expansion compared to 13.7% in 2Q16. PotashCorp (POT) is expected to report a margin of 36%, a contraction from 38%. Agrium (AGU) is expected to report an EBITDA margin of 15.8%, a slight expansion from 15.7%.

Expectations for the upcoming quarter remain subdued for fertilizer companies (MXI). We see these expectations baked into CF Industries’ stock price. Fertilizer companies are lagging the benchmark indexes year-to-date.

Next, we’ll take a look at CF Industries’ earnings expectations.


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