CF INDUSTRIES HOLDINGS INC (NYSE:CF) – A Quality Stock in the Fertilizer Sector

CF INDUSTRIES HOLDINGS INC (NYSE:CF) was identified by our Caviar Cruise quality stock screener as a company with strong fundamentals and attractive long-term investment potential. The nitrogen fertilizer producer demonstrates high profitability, solid financial health, and efficient capital allocation—key traits for quality investors.

Why CF Industries Fits the Quality Investing Criteria

• Strong Profitability: CF has an outstanding Return on Invested Capital (ROIC) of 19.55%, well above the 15% threshold for quality stocks. This indicates efficient use of capital to generate profits.
• Healthy Debt Management: The company’s Debt-to-Free Cash Flow ratio stands at 1.60, meaning it could repay all debt in under two years using current cash flows—a sign of financial strength.
• Consistent EBIT Growth: Over the past five years, CF’s EBIT grew at a 12.87% annual rate, outpacing revenue growth (3.42%), reflecting improving operational efficiency.
• High Profit Quality: The firm converts net income into free cash flow at an impressive rate, with a five-year average Profit Quality of 188.35%, far exceeding the 75% benchmark.

Fundamental Analysis Highlights

Our full fundamental report rates CF a 7/10, with standout scores in profitability (9/10) and financial health (8/10). Key takeaways:

• Margins: Operating margin of 30.71% and profit margin of 21.80% rank in the top 5% of the chemicals industry.
• Valuation: Trading at a P/E of 13.49, CF appears reasonably priced compared to industry peers and the broader market.
• Dividend: A 2.17% yield with a 10-year growth track record, though future sustainability depends on earnings growth.

For more quality stock ideas, explore our Caviar Cruise screener, updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.