CF Industries: The Year in Review and the Outlook



CF Industries

CF Industries (CF) is one of the largest producers of nitrogen fertilizers in the United States. It delivered a positive earnings surprise with each of its three quarterly 2017 earnings.


In the above chart, we’ve plotted CF Industries’ ten-year performance against the S&P 500 Index (SPY) and the VanEck Vectors Agribusiness ETF (MOO). Over this ten-year period, CF Industries returned 89% return to investors while the S&P 500 Index returned slightly below the company at 83%. However, the VanEck Vectors Agribusiness ETF MOO just returned 7% over this period.

YTD (year-to-date) as of December 22, CF Industries was among a handful of companies that managed to outperform peers such as PotashCorp (POT), which returned 11%, The Mosaic Company (MOS), which returned losses of 13.5%, and Agrium (AGU), which returned 13% YTD.

CF Industries also managed to beat two benchmark indexes with a return of 31% compared to the S&P 500’s 19% and the VanEck Vectors Agribusiness ETF MOO’s return of 19%.

Series overview

In this series, we’ll primarily discuss the performance of CF Industries in 2017 and key metrics such as fertilizer prices, shipment volumes, capacity, and demand. We’ll also discuss the valuation multiple forward EV-to-EBITDA (enterprise value-to-earnings before interest, tax, depreciation, and amortization) and compare it with peers’ median. We’ll conclude this series with analysts’ price target for the company.

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