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Will CF Industries See Operating Margin Growth in 1Q18?

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Operating income

Earlier, we saw that CF Industries’ (CF) gross margins are estimated to expand year-over-year in 1Q18 and in fiscal 2018. The EBITDA (earnings before interest, tax, depreciation, and amortization) margin gives us further insight into expectations surrounding the company’s cost initiatives.

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Analyst estimates

For 1Q18, CF Industries’ EBITDA (earnings before interest, tax, depreciation, and amortization) are estimated to grow year-over-year by 22% to $333 million from $272 million a year ago, which also translates into margin growth from 26.2% to 31.2%.

Similarly, the EBITDA for fiscal 2018 is estimated to grow 39% year-over-year to $1.3 billion from $0.97 million in fiscal 2017, which translates into margin expansion for fiscal 2018 from 23.5% to 30.5% year-over-year.

Peer (MOO) Mosaic (MOS) has similar expectations for EBITDA margin growth for 1Q18 as well. Mosaic’s EBITDA margins are estimated to expand to 21.2% from ~12% a year ago in 1Q17.

In a more recent confirmation of the uptrend, Intrepid Potash (IPI), which reported its earnings on April 24, saw its EBITDA margins improve significantly year-over-year. The company reported EBITDA of $11.5 million, which rose from -$0.67 million a year ago. The margin for 1Q18 was 21.5%, which was a significant improvement from an operating loss a year ago.

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