CF Industry Holdings, Inc. (CF) is hanging tough in a very challenging market, trading within $20 of its multi-year high at $163 after reporting strong Q2 results that came in ahead of expectations. Estimates have since jumped higher, providing more support for this Zacks #1 Rank stock.
Company Description
CF Industry Holdings. Inc is a fertilizer manufacturer that specializes in nitrogen and phosphate. The company was founded in 1977 and has a market cap of $10.3 billion.
CF is cashing in on the long-term trend in agriculture where supplies are being pressured by growing demand. That showed up when the company reported strong Q2 results on August 4 that came in ahead of expectations.
Second-Quarter Results
Revenue for the period was up 38% from last year to $1.8 billion. Earnings also looked great, coming in at $6.87, 16% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 12% over the last four quarters.
The company noted that the good quarter was driven by a simple yet profitable mix of higher prices and increased volumes sold.
CF also plans to invest as much as $1 to $1.5 billion in its business, a quadrupling of its quarterly dividend to 40 cents and the approval of a share repurchase program of $1.5 billion through the end of 2013.
Estimates
We saw some decent movement in estimates off the good quarter, with the current year adding 40 cents to $17.43, more than a 100% projected increase in earnings from last year.
Valuation
That has helped keep the valuation picture in check, with CF’s forward P/E of 8.5X a sharp discount to its peers and the overall market.
12-Month Chart
On the chart, CF hit a new multi-year high on the good quarter before pulling back a bit with the overall market. The long-term trend is still intact, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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