CF Industries Q3 Earnings: Can NYSE:CF Hit Its $0.03 EPS Target?

in EARNINGS/INVESTING IDEAS by

CF Industries Holdings, Inc. (NYSE:CF) is scheduled to report Q3 earnings results after markets close for trading on November 4, 2020.

The company is expected to report earnings of $0.03/share on revenue of $872 million. The consensus earnings per share (EPS) of $0.03/share is based on a poll of 12 analysts and represents a decline in eps of −88.2% over the same quarter last year, when the company reported earnings of $0.26/share.

The revenue forecast of $872 million based on a poll of 11 analysts implies a year-over-year (YoY) decline in revenue of −16.0%. Last year the company reported $1.038 billion in revenue for the quarter.

Expected to report EPS contraction of −88.2% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $872.00 $1,038.00 −16.0%
EPS $0.03 $0.26 −88.2%

Earnings Call Trends

Historically, management has exceeded analyst expectations 3 out of the last 8 tracked quarters, and missed expectations 5 quarters.

What are your expectations from CF Industries Holdings, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.59 $0.96 62.7% Beat
Q1, 2020 $0.27 $0.33 22.4% Beat
Q4, 2019 $0.26 $0.25 −3.9% Missed
Q3, 2019 $0.36 $0.26 −27.4% Missed
Q2, 2019 $0.84 $1.13 35.1% Beat
Q1, 2019 $0.33 $0.28 −12.8% Missed
Q4, 2018 $0.45 $0.19 −58.0% Missed
Q3, 2018 $0.17 $0.10 −42.1% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 3.1%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $32.38 $33.39 3.1% Increase
May 6, 2020 $27.31 $27.54 0.8% Increase
February 12, 2020 $42.17 $39.34 −6.7% Decline
October 30, 2019 $46.87 $45.35 −3.2% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.05, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.05 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

CF Industries Holdings, Inc. is currently trading at $26/share, down −0.6% for the day. The company is trading at approximately 53.1% of its 52-week high of $48.88/share. The company’s stock price is down −22.1% since the last earnings report and down −4.6% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 26.88 suggests the company is trading in technically oversold territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CF Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 14.65 and a forward P/E multiple of 18.46.

CF Industries Holdings, Inc.’s current share price also implies a price-to-book (P/B) multiple of 1.93. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $26
P/E Ratio 14.6x
P/E Ratio (Fwd) 18.5x
PEG Ratio −1.2
Total Debt / Total Capital 33.8%
Levered Free Cash Flow $1.161 billion
EV / EBITDA 7.1x

Finbox

CF Industries Holdings, Inc. is a mid-cap stock with a market capitalization of $5.595 billion and a total enterprise value of $11.977 billion. The company operates in the Materials sector and the Chemicals industry.

CF Industries Holdings, Inc. manufactures and distributes nitrogen fertilizers and other nitrogen products worldwide. Its principal nitrogen fertilizer products include anhydrous ammonia, granular urea, urea ammonium nitrate solution, and ammonium nitrate. The company also offers diesel exhaust fluid, urea liquor, nitric acid, and aqua ammonia products, as well as compound fertilizer products with nitrogen, phosphorus, and potassium. It primarily serves cooperatives, independent fertilizer distributors, traders, wholesalers, farmers, and industrial users. The company was founded in 1946 and is headquartered in Deerfield, Illinois.

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