CF Industries Holdings Inc. (NYSE:CF) has experienced fluctuations in its stock price, with a daily loss of -3.19% but a gain of 15.06% over the past three months. The company’s Earnings Per Share (EPS) stands at 12.08. This article aims to conduct a detailed valuation analysis to determine if the stock is modestly undervalued.
CF Industries Holdings is a leading producer and distributor of nitrogen fertilizers, with operations in North America, the United Kingdom, and Trinidad and Tobago. The company uses low-cost U.S. natural gas as its feedstock, making it one of the lowest-cost nitrogen producers globally. CF is also investing in carbon-free blue and green ammonia as an alternative fuel source.
Based on the proprietary GF Value calculation, CF Industries Holdings is currently trading at $74.3 per share, while its estimated fair value stands at $90.61. This suggests that the stock might be undervalued.
The GF Value is determined using historical trading multiples, a GuruFocus ajustment factor, and estimates of future business performance. According to the GF Value, CF Industries Holdings appears to be modestly undervalued. If the share price is significantly below the GF Value Line, the stock may be undervalued and have the potential for higher future returns.
In terms of financial strength, CF Industries Holdings has a cash-to-debt ratio of 0.99, indicating fair financial strength. The overall financial strength of the company is ranked at 7 out of 10 by GuruFocus.
CF Industries Holdings has also demonstrated consistent profitability over the past ten years, with high profit margins and strong earnings per share. Its operating margin ranks better than 95.61% of companies in the Agriculture industry. Additionally, the company’s growth rates for both revenue and EBITDA are better than the industry average.
When comparing the company’s return on invested capital (ROIC) to the weighted average cost of capital (WACC), CF Industries Holdings has a positive ROC of 28.16, indicating that it is creating value for shareholders.
In conclusion, CF Industries Holdings appears to be modestly undervalued based on the GF Value calculation. The company has fair financial strength, strong profitability, and above-average growth rates. Investors may consider further research into CF Industries Holdings as a potential investment opportunity.
Sources:
– GuruFocus.com (No URL provided)
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