Earnings Preview: CF Industries Holdings

CF Industries Holdings (CF) is expected to report Q2 earnings before market open Tuesday, July 28, with a conference call scheduled for 10:00 am ET.

Guidance

The consensus estimate is $3.60 for EPS and $1.21B for revenue, according to First Call.

Analyst Views

Citigroup in a recent note maintained its Q2 operating EPS estimate at $3.70 and it increased their 2H08 estimate by $0.30 to reflect increased nitrogen pricing. Citigroup said that CF's GAAP earnings are likely to show non-cash, mark-to-market gains on natural gas hedges due to a higher natural gas price at the end of Q2of $13.20 per MMBtu vs. Q1's $9.86 per MMBtu.

CF Industries is another large agricultural play that has shown remarkable growth despite a recent sharp pullback. The stock price has more than doubled in the last year as growing food demands in emerging markets combined with government mandates on crop-based biofuels to create a surge in demand for fertilizers.

At the end of Q1, eighteen professional investors counted CF among their top-15, U.S.-listed, equity holdings, including hedge fund giant Citadel Investment Group.

Items to watch: Nitrogen and phosphate spot exposure; Realized natural gas cost; Mark-to-market gains/losses; Updates on uranium, gasification and Peru initiatives; and Forward guidance and mounting cash balance that is diluting returns on capital.

Comments

[Iconoclast421:]

CF is like the silent beast in the sector. It's chart looks better than POT and MOS and AGU. Yet I still dont know what the heck CF stands for (if not "chemical fertilizer").... I bet they prefer it that way.

2008 Jul 28 04:56 PM