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CF Industries Holdings Inc CF

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Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Raising CF Industries' FVE to $55 on Higher Near-Term Nitrogen Price Forecast; Shares Fairly Valued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

CF reported solid first-quarter results even after being impacted by the February winter storm that limited natural gas availability and raised natural gas prices. Adjusted EBITDA grew 25% as higher nitrogen prices overcame lower volumes and higher unit production costs. Despite the storm reducing first-quarter volumes, management maintained its outlook for 19-19.5 million product tons for the year. Given the multi-year high corn prices, we think farmers will plant more corn this year, and CF will make up the volumes over the rest of the year. Additionally, we increased our near-term nitrogen price forecast to account for higher demand. Having updated our model to reflect these changes, we raise our CF fair value estimate to $55 per share from $48. Our no-moat rating is unchanged. We view CF as fairly valued at current prices, with shares trading slightly below our fair value estimate in 3-star territory. 

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Company Profile

Business Description

CF Industries is a leading producer and distributor of nitrogen fertilizers. The company operates seven nitrogen facilities in North America and holds joint-venture interests in further production capacity in the United Kingdom and Trinidad and Tobago. CF makes nitrogen primarily using low-cost U.S. natural gas as its feedstock, making CF one of the lowest-cost nitrogen producers globally. The company is also investing in carbon-free blue and green ammonia, which can be used an alternative fuel to hydrogen or as a means to transport hydrogen.

Contact
4 Parkway North, Suite 400
Deerfield, IL, 60015
T +1 847 405-2400
Sector Basic Materials
Industry Agricultural Inputs
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 3,000

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