CF Industries (CF) to Post Q4 Earnings: What's in the Cards?
CF Industries Holdings, Inc. CF is set to release fourth-quarter 2020 results on Feb 17, after the closing bell.
The company’s fourth-quarter results are likely to reflect the benefits of higher demand for nitrogen fertilizers and lower natural gas costs. However, weak nitrogen prices might have affected margins in the to-be-reported quarter.
Shares of CF Industries have gained 9.7% in the past year compared with 42.7% rise of the industry.
Let’s see how things are shaping up for this announcement.
Factors at Play in Q4
Higher nitrogen fertilizer demand in major markets is likely to have supported the company’s margins in the fourth quarter. Global nitrogen requirements are driven by demand in North America, India and Brazil. Demand for urea imports into Brazil and India remains favorable. This is partly supported by improved farm incomes. Healthy levels of corn planting are also driving demand in North America.
Lower natural gas costs also have been a tailwind for the company. It is enjoying the benefits of access to low cost and abundant North American natural gas supply. The company witnessed lower year-over-year natural gas costs in the third quarter. The trend is likely to have continued in the fourth quarter and might have boosted margins.
However, weak nitrogen pricing is a concern. Greater global supply availability due to increased global operating rates is affecting prices. Moreover, lower global energy prices are putting pressure on product prices. As such, pricing weakness is likely to have continued in the fourth quarter and might have impacted performance.
What do the Estimates Indicate?
The Zacks Consensus Estimate for CF Industries' fourth-quarter total sales is currently pegged at $984.2 million, which calls for 6.2% decline year over year.
The Zacks Consensus Estimate for total sales in the Ammonia segment is currently pegged at $306 million, calling for a 15% rise on a year-over-year basis. The same for the Granular Urea segment is at $287 million, which suggests an increase of 20.1% year over year.
The consensus mark for sales in the urea ammonium nitrate solution segment is currently pegged at $273 million, which suggests a decline of 18.8% year over year.
The Zacks Consensus Estimate for total sales in the ammonium nitrate segment is currently pegged at $116 million, which indicates a decline of around 1% year over year.
Zacks Model
Our proven model does not predict an earnings beat for CF Industries this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That’s not the case here.
Earnings ESP: Earnings ESP for CF Industries is -25.60%. The Zacks Consensus Estimate is currently pegged at 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CF Industries currently sports a Zacks Rank #1.
CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote
Stocks to Consider
Here are some companies you may want to consider as our model shows that have the right combination of elements to post an earnings beat this quarter:
Koppers Holdings Inc. KOP, scheduled to release earnings on Feb 24, has an Earnings ESP of +23.20% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Albemarle Corporation ALB, scheduled to release earnings on Feb 17, has an Earnings ESP of +2.59% and carries a Zacks Rank #3.
SSR Mining Inc. SSRM, scheduled to release earnings on Feb 17, has an Earnings ESP of +2.57% and carries a Zacks Rank #3.
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