CF INDUSTRIES HOLDINGS INC (NYSE:CF) – A Potentially Undervalued Fertilizer Play

CF INDUSTRIES HOLDINGS INC (NYSE:CF) was identified by our Decent Value stock screener as a company with attractive fundamentals and reasonable valuation. The nitrogen fertilizer producer scores well on profitability and financial health while trading at a discount compared to peers.

Valuation: Trading Below Industry Averages

• P/E Ratio: CF trades at a P/E of 13.03, below the industry average of 25.84 and the S&P 500’s 26.65.
• Enterprise Value/EBITDA: The company’s EV/EBITDA ratio is cheaper than 88% of its chemical industry peers.
• Price/Free Cash Flow: CF’s P/FCF ratio is lower than 91% of competitors, indicating strong cash generation relative to its share price.

Strong Profitability Metrics

• High Margins: CF boasts an operating margin of 30.71%, outperforming 95% of industry peers. Its profit margin of 21.80% ranks in the top 1% of the sector.
• ROIC & ROE: The company’s return on invested capital (12.60%) and return on equity (27.95%) are well above industry averages.

Solid Financial Health

• Low Debt Risk: CF’s debt-to-FCF ratio of 1.60 suggests it could repay all debt in under two years.
• Liquidity Strength: Current and quick ratios of 2.59 and 2.22, respectively, indicate ample short-term financial flexibility.

Growth Outlook

• EPS Growth: Earnings per share grew 17.06% over the past year and have averaged 24.81% annually over the last five years.
• Dividend Growth: CF has raised its dividend for 10+ consecutive years, with a 10.99% annualized growth rate.

Our Decent Value screener lists more stocks with similar value characteristics.
For a deeper dive, review the full fundamental report on CF.

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.