CF Industries Holdings, Inc.’s CF shares have popped 15% over the past month. The company has also outperformed the Zacks Fertilizers industry’s 11.8% rise over the same time frame. CF has also topped the S&P 500’s roughly 10.5% increase over the same period.

Let’s take a look into the factors that are driving this fertilizer maker.Zacks Investment Research

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CF Stock Gains on Healthy Nitrogen Demand, Higher Prices

CF Industries benefits from the rising global demand for nitrogen fertilizers, which is driven by significant agricultural demand. Industrial demand for nitrogen has also recovered from the pandemic-related disruptions. Global demand is expected to remain strong in the near future due to recovering industrial demand and farmer economics. High levels of corn planted acres and low nitrogen channel inventories are expected to drive demand for nitrogen in North America. Demand for urea is also likely to remain strong in Brazil on higher corn acres. Demand in India is expected to be driven by low inventory levels.

CF, on its first-quarter call, anticipates the global supply-demand balance to remain constructive in the near term due to expected strong demand from the global corn stocks-to-use ratio reaching its lowest level since 2013, as well as challenging production economics in Europe.

In North America, CF Industries expects strong nitrogen demand during the spring application season due to favorable returns for corn compared to soybeans, driving higher year-over-year planted corn acres in 2025. Nitrogen imports to Brazil are likely to remain high in 2025 due to anticipated high corn plantings and ongoing minimal domestic nitrogen output. Urea inventory in India is predicted to be low due to strong domestic demand, which is expected to drive urea imports this year to meet grower demand and replenish stocks.

Higher nitrogen prices are also driving the company’s top line. Its net sales rose around 13% year over year to $1,663 million in the first quarter. Average selling prices for most of CF’s key products increased year over year in the quarter as higher global energy costs raised the global market-clearing price needed to meet global demand. The company is expected to continue to gain from higher prices going forward. 

CF remains committed to boosting shareholders’ value by leveraging strong cash flows. Net cash provided by operating activities was $586 million in the first quarter, up around 32% year over year. CF Industries repurchased 5.4 million shares worth $434 million during the quarter. The current $3 billion share repurchase program had around $630 million remaining at the end of the first quarter. Its board authorized a new $2 billion share repurchase program, effective through 2029.

Story Continues

CF Industries Holdings, Inc. Price and ConsensusCF Industries Holdings, Inc. Price and Consensus

CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote

CF’s Zacks Rank & Other Key Picks

CF currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, Newmont Corporation NEM and Hawkins, Inc. HWKN. While CRS and NEM sport a Zacks Rank #1 (Strong Buy), HWKN carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Carpenter Technology for the current fiscal year stands at $7.27, reflecting a 43.4% year-over-year increase. CRS beat the consensus estimate in each of the trailing four quarters, with the average earnings surprise being 11.1%. CRS’ shares have shot up roughly 106% in a year. 

The Zacks Consensus Estimate for Newmont’s current-year earnings is pegged at $4.13, indicating an 18.7% year-over-year rise. Its earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed it once, with an average surprise of 32.4%. NEM’s shares have gained around 25% in the past year.

The consensus estimate for Hawkins’ current fiscal-year earnings stands at $4.37, suggesting an 8.4% year-over-year increase. HWKN beat the consensus estimate in two of the trailing four quarters, while missing twice. In this time frame, it has delivered an earnings surprise of roughly 8.2%, on average. The company's shares have rallied roughly 42% in the past year.

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This article originally published on Zacks Investment Research (zacks.com).

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