Earnings Beat: CF Industries Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models – Yahoo Finance

CF Industries Holdings, Inc. (NYSE:CF) just released its quarterly report and things are looking bullish. It was overall a positive result, with revenues beating expectations by 5.0% to hit US$971m. CF Industries Holdings also reported a statutory profit of US$0.31, which was an impressive 23% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for CF Industries Holdings

NYSE:CF Past and Future Earnings May 8th 2020

Following the recent earnings report, the consensus from 18 analysts covering CF Industries Holdings is for revenues of US$4.21b in 2020, implying a discernible 7.6% decline in sales compared to the last 12 months. Statutory earnings per share are forecast to plummet 21% to US$1.70 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$4.19b and earnings per share (EPS) of US$1.53 in 2020. There was no real change to the revenue estimates, but the analysts do seem more bullish on earnings, given the nice increase in earnings per share expectations following these results.

The consensus price target was unchanged at US$36.76, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic CF Industries Holdings analyst has a price target of US$52.00 per share, while the most pessimistic values it at US$24.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast revenue decline of 7.6%, a significant reduction from annual growth of 1.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 4.0% next year. It's pretty clear that CF Industries Holdings' revenues are expected to perform substantially worse than the wider industry.

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CF Industries Holdings' earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that CF Industries Holdings' revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$36.76, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for CF Industries Holdings going out to 2024, and you can see them free on our platform here..

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That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with CF Industries Holdings (at least 1 which is concerning) , and understanding them should be part of your investment process.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.

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Earnings Beat: CF Industries Holdings, Inc. Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models - Yahoo Finance