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CF Industries (CF) to Report Q1 Earnings: What's in Store?

Zacks Equity Research
·4-min read

CF Industries Holdings, Inc. CF is set to release first-quarter 2020 results after the closing bell on May 6. The company is likely to have gained from higher demand for nitrogen fertilizers and lower natural gas costs in the quarter. However, the impact of lower prices is likely to get reflected in its results.

In the last reported quarter, the fertilizer maker delivered a negative earnings surprise of roughly 3.9%. Its sales also missed expectations. The company faced challenges from lower year-over-year selling prices across all major products in the period.

The company’s shares are down 39.2% over a year compared with a 35% decline recorded by the industry it belongs to.


 

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Let’s see how things are shaping up for this announcement.

What do the Estimates Indicate?

The Zacks Consensus Estimate for CF Industries' first-quarter total sales is currently pegged at $891.3 million, which suggests an 11% decline year over year.

The Zacks Consensus Estimate for total sales for the Ammonia segment is currently pegged at $243 million, calling for a 30% increase on a year-over-year basis. The same for the Granular Urea segment currently stands at $302 million, which suggests a fall of 11.9% year over year.

Moreover, the consensus mark for sales in the urea ammonium nitrate solution segment is currently pegged at $183 million, which indicates a decline of 25.8% year over year.

The Zacks Consensus Estimate for total sales in the ammonium nitrate segment is currently pegged at $98 million, which suggests a decline of 22.8% year over year.

Some Factors at Play

Favorable demand for nitrogen fertilizers in North America as well as Brazil and India is likely to have supported the company’s results in the to-be-reported quarter. The company is expected to have witnessed higher demand in North America during the March quarter on the back of a return of normal planting conditions following a weak fall application season due to bad weather.

Benefits of lower natural gas costs are also likely to get reflected in the company’s first-quarter results. CF Industries is enjoying the benefits of access to low cost and abundant North American natural gas supply.

However, the company faces headwinds from lower nitrogen prices. Greater global supply availability due to increased operating rates and lower global energy prices are exerting pressure on nitrogen prices. Lower product prices are likely to have weighed on CF Industries’ sales and margins in the first quarter.
 

CF Industries Holdings, Inc. Price and EPS Surprise

 

CF Industries Holdings, Inc. Price and EPS Surprise
CF Industries Holdings, Inc. Price and EPS Surprise

CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote

 

Zacks Model

Our proven model does not conclusively predict an earnings beat for CF Industries this season. 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. But that’s not the case here.
 
Earnings ESP: Earnings ESP for CF Industries is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are currently pegged at 23 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 carries a Zacks Rank #4 (Sell).

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

The Scotts Miracle-Gro Company SMG, scheduled to release earnings on May 6, has an Earnings ESP of +1.49% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Wheaton Precious Metals Corp. WPM, scheduled to release earnings on May 6, has an Earnings ESP of +0.39% and a Zacks Rank #2.

Domtar Corporation UFS, slated to release earnings on May 8, has an Earnings ESP of +39.81% and a Zacks Rank #3.

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CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
 
The Scotts Miracle-Gro Company (SMG) : Free Stock Analysis Report
 
Domtar Corporation (UFS) : Free Stock Analysis Report
 
Wheaton Precious Metals Corp. (WPM) : Free Stock Analysis Report
 
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Zacks Investment Research