Company Reports

CF Industries' first-quarter results reflected the continued decline of nitrogen fertilizer prices from the all-time high levels reached in mid-2022. We updated our near-term outlook for lower US natural gas prices, which is the largest component of CF's unit production costs. Separately, we reduced our 2024 volume forecast for CF due to unplanned outages at a couple of plants during the first quarter. Our near- and long-term nitrogen price forecasts are unchanged. Having updated our model to incorporate these changes and CF's first quarter results, we maintain our $85 fair value estimate and narrow-moat rating is also unchanged. Shares were down over 5% on the day. At current prices, we view CF shares as slightly undervalued, with the stock trading a little more than 10% below our fair value estimate but in 3-star territory.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the US Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

CF Industries' fourth-quarter results reflected lower nitrogen prices that were partially offset by lower U.S. natural gas prices reducing the company's input costs. Adjusted EBITDA fell over 50% versus the prior-year quarter due to lower prices. For nitrogen producers, 2022 marked peak cyclical conditions, with nitrogen prices reaching multiyear highs. As such, we had expected CF's profits would see cyclical highs in 2022 and decline in 2023. Having updated our model to incorporate these results, we maintain our $85 fair value estimate. Our narrow moat rating is also unchanged.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

After review, we upgrade our economic moat rating for CF Industries to narrow from none. We maintain our $85 per share fair value estimate as we previously incorporated a steeper cost curve and higher midcycle profits into our valuation. Our High Uncertainty Rating and Standard Capital Allocation Rating are also unchanged for the company.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

CF Industries' third-quarter results reflected lower nitrogen prices, where spot prices generally bottomed out near the beginning of the quarter, before slightly rising during the quarter. However, we had expected the lower results given our forecast for lower nitrogen prices. With our near- and long-term nitrogen price forecast unchanged, we maintain our $85 per share fair value estimate for CF Industries. Our no-moat rating is also unchanged.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

Fertilizer stocks rallied following the Hamas attack on Israel and the Israeli military response. Of the three primary fertilizers, Israel is a major exporter of potash, accounting for around 6% of global exports based on Nutrien's 2022 fact book. The country is not a major exporter of nitrogen or phosphate. We think the market may be reacting to the increased potential for a supply disruption if the conflict leads to the destabilization of export volumes from Israel.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

We maintain our $85 per share fair value estimate for CF Industries following the company's second-quarter earnings. Our no-moat rating is also unchanged. At current prices, we view CF shares as fairly valued, with the stock trading just below our fair value estimate. As such, we recommend investors wait for the stock to pullback and offer a larger margin of safety before we would recommend shares.

We maintain our CF Industries $85 per share fair value estimate after updating our valuation model to incorporate first-quarter results as well as our lower near-term, nitrogen, and U.S. natural gas price forecasts. Our no-moat rating is unchanged.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

After updating our CF Industries model to incorporate the company's fourth-quarter earnings, we maintain our $85 per share fair value estimate. Our no-moat rating is also unchanged.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

After updating our forecast for CF Industries' third-quarter results and our new long-term nitrogen price outlook, we raise our CF fair value estimate to $85 per share from $80. Our no-moat rating is unchanged.

CF Industries reported strong second-quarter results. Adjusted EBITDA more than tripled year over year, driven by peak nitrogen fertilizer prices. The results were in line with our outlook for the year.

CF Industries is the largest nitrogen producer in North America, with production based in the United States and Canada. CF's plants, which benefit from low-cost North American natural gas, are connected to its main customers in the U.S. Corn Belt by an extensive distribution network of pipelines, rail, and barge, giving the company a transportation cost advantage over foreign competition without pipeline access.

On July 18, the U.S. International Trade Commission issued a negative determination in its final investigation regarding imports of urea ammonium nitrate, a nitrogen fertilizer, from Russia and Trinidad and Tobago. This means there will be no import duties, which eliminates the preliminary duties imposed last November at an earlier stage of the investigation.