Shares of CF Industries Holdings, Inc. CF touched a 52-week low of $39.64 yesterday, before eventually closing marginally higher at $40.07.
The company’s shares have tumbled around 17% in the past one month. Also, the stock has lost roughly 24% so far this year.
Factors to Consider
CF Industries' adjusted earnings for third-quarter 2015 fell year over year and missed the Zacks Consensus Estimate by a wide margin. Weak prices for nitrogen fertilizer weighed on the bottom line.
The company’s earnings before interest, taxes, depreciation and amortization (EBITDA) were $256 million in the third quarter, indicating a roughly 24% decline from $338 million a year ago, owing to devaluation of multiple currencies during the reported quarter.
CF Industries continues to see pricing pressure in its nitrogen business. Urea prices have been under pressure due to higher supply from Chinese producers. Chinese urea exports for 2015 are expected to be around 12 million tons.
Production volumes, in the third quarter, were adversely affected by the turnaround and refurbishment of the company’s facility in Woodward, OK. The facility was idled for 75 days during the reported quarter, pulling down year-over-year production by around 200,000 tons combined of UAN, ammonia and DEF.
CF Industries also faces intense pricing competition from both domestic and foreign fertilizer producers. China, being the world’s largest producer and consumer of fertilizers, influences global fertilizer prices. As one of the largest producers and exporters of urea, Russia and Ukraine have a greater leverage on the global urea price.
Moreover, CF Industries continues to operate with a high debt level, with total debt of roughly $5.6 billion at the end of the third quarter. The company’s existing indebtedness and any additional debt which it may incur in the future could negatively impact its operations and liquidity.
Zacks Rank
CF Industries currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked companies in the basic materials space include Celanese Corp. CE, Innospec Inc. IOSP and Akzo Nobel N.V. AKZOY, all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment