Unfortunately for some shareholders, the CF Industries Holdings (NYSE:CF) share price has dived 31% in the last thirty days. Indeed the recent decline has arguably caused some bitterness for shareholders who have held through the 39% drop over twelve months.
Assuming nothing else has changed, a lower share price makes a stock more attractive to potential buyers. In the long term, share prices tend to follow earnings per share, but in the short term prices bounce around in response to short term factors (which are not always obvious). The implication here is that long term investors have an opportunity when expectations of a company are too low. Perhaps the simplest way to get a read on investors' expectations of a business is to look at its Price to Earnings Ratio (PE Ratio). A high P/E implies that investors have high expectations of what a company can achieve compared to a company with a low P/E ratio.
See our latest analysis for CF Industries Holdings
We can tell from its P/E ratio of 11.41 that sentiment around CF Industries Holdings isn't particularly high. If you look at the image below, you can see CF Industries Holdings has a lower P/E than the average (15.0) in the chemicals industry classification.
Its relatively low P/E ratio indicates that CF Industries Holdings shareholders think it will struggle to do as well as other companies in its industry classification. Many investors like to buy stocks when the market is pessimistic about their prospects. If you consider the stock interesting, further research is recommended. For example, I often monitor director buying and selling.
Generally speaking the rate of earnings growth has a profound impact on a company's P/E multiple. If earnings are growing quickly, then the 'E' in the equation will increase faster than it would otherwise. And in that case, the P/E ratio itself will drop rather quickly. So while a stock may look expensive based on past earnings, it could be cheap based on future earnings.
Story continues
CF Industries Holdings's earnings made like a rocket, taking off 80% last year. Unfortunately, earnings per share are down 16% a year, over 5 years.
It's important to note that the P/E ratio considers the market capitalization, not the enterprise value. So it won't reflect the advantage of cash, or disadvantage of debt. Hypothetically, a company could reduce its future P/E ratio by spending its cash (or taking on debt) to achieve higher earnings.
While growth expenditure doesn't always pay off, the point is that it is a good option to have; but one that the P/E ratio ignores.
CF Industries Holdings's net debt is 66% of its market cap. If you want to compare its P/E ratio to other companies, you should absolutely keep in mind it has significant borrowings.
CF Industries Holdings trades on a P/E ratio of 11.4, which is below the US market average of 13.0. The company may have significant debt, but EPS growth was good last year. If the company can continue to grow earnings, then the current P/E may be unjustifiably low. Given CF Industries Holdings's P/E ratio has declined from 16.5 to 11.4 in the last month, we know for sure that the market is significantly less confident about the business today, than it was back then. For those who don't like to trade against momentum, that could be a warning sign, but a contrarian investor might want to take a closer look.
Investors should be looking to buy stocks that the market is wrong about. If the reality for a company is not as bad as the P/E ratio indicates, then the share price should increase as the market realizes this. So this free visual report on analyst forecasts could hold the key to an excellent investment decision.
But note: CF Industries Holdings may not be the best stock to buy. So take a peek at this free list of interesting companies with strong recent earnings growth (and a P/E ratio below 20).
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.
See original here:
What Is CF Industries Holdings's (NYSE:CF) P/E Ratio After Its Share Price Tanked? - Yahoo Finance
- Lowe's Teams Up with Lionel Messi, Inter Miami CF and CONMEBOL Copa Amrica 2024 USA to Win Over Soccer ... - Lowes Corporate - April 20th, 2024 [April 20th, 2024]
- Canyon Endurace CF SLX 8 AXS Aero All in the name of speed and distance? - GRAN FONDO Cycling Magazine - April 20th, 2024 [April 20th, 2024]
- Porosome treatment targeting CFTR shows promise in CF models - Cystic Fibrosis News Today - April 20th, 2024 [April 20th, 2024]
- The Reign of Girls Generation's YoonA in Endorsements: The CF Queen - allkpop - April 20th, 2024 [April 20th, 2024]
- Lowe's Teams Up with Lionel Messi, Inter Miami CF and CONMEBOL Copa Amrica 2024 USA to Win Over Ftbol ... - Inter Miami CF - April 20th, 2024 [April 20th, 2024]
- The changing epidemiology of pulmonary infection in children and adolescents with cystic fibrosis: an 18-year ... - Nature.com - April 20th, 2024 [April 20th, 2024]
- Controlling anxiety is a key part of managing my health with CF - Cystic Fibrosis News Today - April 20th, 2024 [April 20th, 2024]
- Orlando City at CF Montreal: Three Keys to Victory - The Mane Land - April 20th, 2024 [April 20th, 2024]
- Learn to Evaluate (CF) using the Charts - Stock Traders Daily - April 20th, 2024 [April 20th, 2024]
- CF Industries and JERA Announce Joint Development Agreement to Develop Greenfield Low-Carbon Ammonia ... - Business Wire - April 20th, 2024 [April 20th, 2024]
- CF Montreal plays Orlando City in conference action - FOX Sports - April 20th, 2024 [April 20th, 2024]
- CF Montral: What is the ceiling for Josef Martnez's new team? | MLSSoccer.com - MLSsoccer.com - April 20th, 2024 [April 20th, 2024]
- Spotlight on CF Industries Holdings: Analyzing the Surge in Options Activity - CF Industries Holdings (NY - Benzinga - April 20th, 2024 [April 20th, 2024]
- Mamardashvili boast the highest spot-kick saves this season - Valencia CF - April 20th, 2024 [April 20th, 2024]
- Jaume Domnech: "I have the VCF DNA inside me" - Valencia CF - April 20th, 2024 [April 20th, 2024]
- MATCH RECAP: Inter Miami CF Earns 2-3 Win on the Road Over Sporting Kansas City at a Packed Arrowhead Stadium - Inter Miami CF - April 20th, 2024 [April 20th, 2024]
- Pavel "The Experiment" Dailidko: Undefeated in 2023 and Charging into BRAVE CF 81 this Saturday, April 20 - Black Belt Magazine - April 20th, 2024 [April 20th, 2024]
- JERA and CF Industries Holdings sing ammonia production deal - SAFETY4SEA - April 20th, 2024 [April 20th, 2024]
- Lowe's Teams Up with Lionel Messi, Inter Miami CF and CONMEBOL Copa Amrica 2024 USA to Win Over Soccer ... - PR Newswire - April 20th, 2024 [April 20th, 2024]
- CF Industries Holdings, Inc. (NYSE:CF) Shares Purchased by Mirae Asset Global Investments Co. Ltd. - Defense World - April 20th, 2024 [April 20th, 2024]
- CF: Milan to jump above Juventus in UEFA ranking for first time in 10 years - Sempre Milan - April 20th, 2024 [April 20th, 2024]
- Color Star's Partner Team Villarreal CF Bests Real Madrid CF Once Again As The Yellow Submarine Maintains Its Impressive Win Record -... - April 19th, 2023 [April 19th, 2023]
- Brave CF 70 Slovenia: Joilton Lutterbach vs. Andreas Gustafsson; Date, fight times, how to watch on DAZN - dazn.com - April 19th, 2023 [April 19th, 2023]
- Malaga CF owner Sheikh Al-Thani vows never to put the club he has run into the ground up for sale - The Olive Press - April 19th, 2023 [April 19th, 2023]
- CF Industries partnering with South Korea firm on $2 billion blue ammonia project in Ascension - The Advocate - March 4th, 2023 [March 4th, 2023]
- Cystic Fibrosis (CF): Causes, Symptoms, Diagnosis & Treatment - February 7th, 2023 [February 7th, 2023]
- Reg CF: 2022 Delivered A Decline For Investment Crowdfunding As Economy Slowed, But Expectations Going - Crowdfund Insider - February 7th, 2023 [February 7th, 2023]
- Cystic fibrosis life expectancy: Averages by stage and age - February 2nd, 2023 [February 2nd, 2023]
- Cystic Fibrosis Carrier: What You Should Know - Healthline - February 2nd, 2023 [February 2nd, 2023]
- Cystic Fibrosis: Prenatal Screening and Diagnosis | ACOG - February 2nd, 2023 [February 2nd, 2023]
- CF Moto to launch a retro mini bike, will compete with Honda Grom in the international markets, all we know so far - DNP INDIA - February 2nd, 2023 [February 2nd, 2023]
- CF Industries Holdings, Inc. (NYSE:CF) Short Interest Down 10.3% in October - MarketBeat - November 16th, 2022 [November 16th, 2022]
- Will CF Industries Holdings, Inc. (CF) Stay at the Top of the Basic Materials Sector? - InvestorsObserver - October 25th, 2022 [October 25th, 2022]
- Wanyama on Sunday played his last match for CF Montreal- Here are potential destinations - The Standard - October 25th, 2022 [October 25th, 2022]
- Scouting Report: 5 things you should know about CF Montral when they play NYCFC in the MLS Cup Playoffs - Hudson River Blue - October 21st, 2022 [October 21st, 2022]
- 2-year-old living with cystic fibrosis helped by new treatments - 11Alive.com WXIA - October 13th, 2022 [October 13th, 2022]
- Phage Trial to Treat CF Patients with Multi-Drug Resistant Bacterial Infections - UC San Diego Health - October 13th, 2022 [October 13th, 2022]
- High Blood-sugar Levels at Night Affect Lung Function in CF Adults... - Cystic Fibrosis News Today - October 13th, 2022 [October 13th, 2022]
- This 7-year-old is finally on a 'life-changing' cystic fibrosis drug. For others in Ontario, access is tricky - CBC.ca - October 13th, 2022 [October 13th, 2022]
- CF's Thomas and Easttam dodge Panthers' high-powered defense, tackle running offense head-on - Camden News - October 13th, 2022 [October 13th, 2022]
- The Difficulties of Diving Back In After Taking a Hiatus | Cystic... - Cystic Fibrosis News Today - October 13th, 2022 [October 13th, 2022]
- Cystic Fibrosis Market to Showcase Growth at a CAGR of 9% During the Forecast Period (2022-2032) | DelveInsight - PR Newswire - October 13th, 2022 [October 13th, 2022]
- Massive Predictions: Columbus Crew at CF Montral - Massive Report - September 9th, 2022 [September 9th, 2022]
- Why CF Acquisition Corp. VI Blasted 14% Higher Today - The Motley Fool - September 9th, 2022 [September 9th, 2022]
- Watch Real Betis vs. Villarreal CF Online: Live Stream, Start Time - For The Win - September 9th, 2022 [September 9th, 2022]
- Watch Getafe CF vs. Real Sociedad Online: Live Stream, Start Time - For The Win - September 9th, 2022 [September 9th, 2022]
- Mauro Icardi linked with move to Inter Miami CF - AS USA - September 9th, 2022 [September 9th, 2022]
- CF Acquisition (NASDAQ:CFVI) Rumble Takes On Traditional Media Outlets With New 'Rumble Exclusives' Liv - Benzinga - September 9th, 2022 [September 9th, 2022]
- SF Giants CF struggles on triple by Klay's brother - SFGATE - July 25th, 2022 [July 25th, 2022]
- CF Industries Holdings, Inc. Statement Regarding ITC Injury Determination Concerning Imports of UAN from Russia and Trinidad and Tobago - Business... - July 25th, 2022 [July 25th, 2022]
- CF man jailed in hit-and-run case - Leader-Telegram - July 25th, 2022 [July 25th, 2022]
- AEG and Socios.com Launch Partnership for the Inaugural Soccer Champions Tour Featuring Real Madrid CF, FC Barcelona, Juventus, Club America and Club... - July 25th, 2022 [July 25th, 2022]
- Taty Castellanos plays his final game for NYCFC in 2-0 home win - Hudson River Blue - July 25th, 2022 [July 25th, 2022]
- Padres' Fernando Tatis Jr.: Position Change to CF from SS 'Not out of the Question' - Bleacher Report - July 25th, 2022 [July 25th, 2022]
- CF Industries Stock: From Boom To Bust - Sell Into The Rallies (NYSE:CF) - Seeking Alpha - June 20th, 2022 [June 20th, 2022]
- CF graduates to chart their own paths to success - Valley Breeze - June 20th, 2022 [June 20th, 2022]
- Poirier: We need the strength of the fans" - Real Madrid CF - June 20th, 2022 [June 20th, 2022]
- Vertex to Present Data Demonstrating Significant Benefits of Long-Term and Early Treatment With CFTR Modulators at the European Cystic Fibrosis... - June 11th, 2022 [June 11th, 2022]
- Jayda Coleman, Oklahoma CF, robs Texas of a home run at the wall - Saturday Down South - June 11th, 2022 [June 11th, 2022]
- Gennaro Gattuso brings tenacity and technique to the Valencia CF dugout - Yardbarker - June 11th, 2022 [June 11th, 2022]
- 77-85: On to the league final - Real Madrid CF - June 11th, 2022 [June 11th, 2022]
- Gator Greats On CF Hall of Fame Ballot - ESPN 98.1 FM - 850 AM WRUF - WRUF - June 11th, 2022 [June 11th, 2022]
- Mariners CF Julio Rodrguez named AL Rookie of the Month for May - Seattle Sports - June 5th, 2022 [June 5th, 2022]
- CF woman charged with theft of trade secrets from former employer - Leader-Telegram - June 5th, 2022 [June 5th, 2022]
- Laso: The team were magnificent in defense" - Real Madrid CF - June 5th, 2022 [June 5th, 2022]
- The Austrian Wonderboy Returns To Action At BRAVE CF 59 in Uzbekistan - FightBook MMA - June 5th, 2022 [June 5th, 2022]
- Son Ye Jin Teases Fans With First CF Since Wedding to Hyun Bin - Kdramastars - June 5th, 2022 [June 5th, 2022]
- Fourth anniversary of the Duodcima - Real Madrid CF - June 5th, 2022 [June 5th, 2022]
- Meet the Avro CF-105 Arrow: The Long-Ranger Fighter Designed to Battle Russia - 19FortyFive - June 5th, 2022 [June 5th, 2022]
- Charlottetown to host professional soccer match between Sunderland AFC, CF Montral U23 teams - Saltwire - June 5th, 2022 [June 5th, 2022]
- Neutrophil Dysfunction in the Pathogenesis of Cystic Fibrosis (CF) - Physician's Weekly - May 21st, 2022 [May 21st, 2022]
- CF Industries Holdings, Inc. (NYSE:CF) Expected to Announce Earnings of $6.16 Per Share - Defense World - May 21st, 2022 [May 21st, 2022]
- Living with Cystic Fibrosis: A CF patient experience story | LHSC - London Health Sciences Centre - May 21st, 2022 [May 21st, 2022]
- CF Montreals Ismal Kon is showing impressive promise early this MLS season - The Athletic - May 21st, 2022 [May 21st, 2022]
- Film produced by CF native to be shown at Micon Cinemas - Leader-Telegram - May 21st, 2022 [May 21st, 2022]
- CF & CFRP Market Research Report by Carbon Fiber Materials, Resin Type, Manufacturing Process, End-use Industry, Region - Global Forecast to 2027... - May 21st, 2022 [May 21st, 2022]
- Experienced defensive backs for CF thriving this off-season - Camden News - May 21st, 2022 [May 21st, 2022]
- The 37th anniversary of Real Madrid's first UEFA Cup - Real Madrid CF - May 21st, 2022 [May 21st, 2022]
- Q&A: How a Cystic fibrosis diagnosis has changed in recent years - WRAL News - May 6th, 2022 [May 6th, 2022]
- Kinnear: Hope, Turning CF Into 'Cure Found' and Betting on the Long Shot - insidelacrosse.com - May 6th, 2022 [May 6th, 2022]