August 15, 2024
Top 10 Stock CF Industries Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: CF Industries – Top 10 Stock in Employee Satisfaction Leaders in the United States
CF Industries is listed as a top 10 stock on August 15, 2024 in the market index Employee Focus US because of its high performance in at least one of the Obermatt investment strategies. Two consolidated Obermatt Ranks are above-average. The company is safely financed and the professional investor sentiment is positive. Both are encouraging signals for a stock purchase decision, albeit at an above-average share price. Based on the Obermatt 360° View of 75 (top 75% performer), Obermatt assesses an overall strong buy recommendation for CF Industries on August 15, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Fertilizers & Agricultural Chemicals |
| Index | Low Emissions, Employee Focus US, Human Rights, S&P 500 |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View CF Industries Strong Buy
| 360 METRICS | August 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 41 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 36 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 94 |
|
||||||
| SENTIMENT | ||||||||
| SENTIMENT | 61 |
|
||||||
| 360° VIEW | ||||||||
| 360° VIEW | 75 |
|
||||||
ANALYSIS: With an Obermatt 360° View of 75 (better than 75% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock CF Industries are very positive. The 360° View is based on consolidating four consolidated indicators, with half below and half above average for CF Industries. The consolidated Sentiment Rank has a good rank of 61, which means that professional investors are more optimistic about the stock than for 61% of alternative investment opportunities. It also rates well regarding its financing structure, with the consolidated Safety Rank at 94 or better than 94% of its peers when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. But the stock is expensive and expects low growth. The consolidated Value Rank is only 41, meaning that the share price of CF Industries is on the high side, compared with indicators such as revenues, profits, and invested capital. The company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth,and stock returns, with its Growth Rank at 36. ...read more
RECOMMENDATION: With a consolidated 360° View of 75, CF Industries is better positioned than 75% of all alternative stock investment opportunities based on the Obermatt Method. As only half of the consolidated Obermatt Ranks exhibit excellent performance, namely the positive professional market sentiment (Sentiment Rank of 61) and safe financing practices (Safety Rank of 94), the case for investing in this stock needs further thought. The Value and the Safety Ranks are below average. The Safety Rank is the least critical of the four consolidated ranks, because it only reflects financing practices. So the question is: How to assess below-average value against above-average sentiment? This may be a case where growth is in the future, not yet reflected in current performance. Companies that might fall into this category are those with intellectual property, such as technology and pharmaceutical companies. In early phases, they are expensive relative to their size and have a lot of capital on their books, as is the case here. Investors expect a better future and are willing to pay a higher price than is warranted by the current company size. These higher prices drive stock price value down in the short term. In this case, future growth may be the strongest driver of the investment case, reflected by institutional investors' opinions. With a weak Value Rank, the question is how much to sacrifice value at the cost of positive sentiment. Sometimes market sentiment is just hype, but sometimes it is right. You pay more than market-average for this stock, but it may be worth it, if the future of CF Industrieṣ is bright. Prudent investors may only want to invest a smaller portion of their wealth in such situations. Young investors can carry more risk but should still thrive for sufficient diversification. ...read more
Sentiment Strategy: Professional Market Sentiment for CF Industries positive
ANALYSIS: With an Obermatt Sentiment Rank of 61 (better than 61% compared with alternatives), overall professional sentiment and engagement for the stock CF Industries is above average. The Sentiment Rank is based on consolidating four sentiment indicators, with all but one indicator above average for CF Industries. Analyst Opinions are at a rank of 14 (worse than 86% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 61, which indicates a shift in stock research experts opinions for the better. In other words, they are getting more optimistic about stock investments in CF Industries. Even better, the Professional Investors rank is 96, meaning that professional investors hold more stock in this company than in 96% of alternative investment opportunities. Pros tend to favor investing in this company. Furthermore, Market Pulse has a rank of 64, which means that the current professional news and professional social networks are upbeat when discussing this company (more positive news than for 64% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 61 (more positive than 61% compared with investment alternatives), CF Industries has a reputation among professional investors that is above-average compared with that of its competitors. While analysts are still critical of the company, some are changing their minds. In addition, the professional news channels are optimistic, and many institutional investors have already bought stock in the company. These are encouraging signals, despite the still lower level of analyst recommendations. They may be due to a problematic past, and about to change. The positive sentiment signals are stronger than the negative. ...read more
Value Strategy: CF Industries Stock Price Value below-average critical
ANALYSIS: With an Obermatt Value Rank of 41 (worse than 59% compared with alternatives), CF Industries shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for CF Industries. Price-to-Profit (also referred to as price-earnings, P/E) is 61 which means that the stock price compared with what market professionals expect for future profits is lower than for 61% of comparable companies, indicating a good value concerning CF Industries's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 36, which means that the stock price is lower as regards to invested capital than for 36% of comparable investments. On the other hand, Price-to-Sales is less favorable than 84% of alternatives (only 16% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 24% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 41, is a hold recommendation based on CF Industries's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. ...read more
Growth Strategy: CF Industries Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 36 (better than 36% compared with alternatives), CF Industries shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for CF Industries. Capital Growth has a rank of 95, which means that currently professionals expect the company to grow its invested capital more than 19% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 58 (above 58% of alternative investments). But Sales Growth has only a rank of 17, which means that, currently, professionals expect the company to grow less than 83% of its competitors, and Profit Growth is also low at a rank of 19. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 36, is a hold recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for CF Industries, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. ...read more
Safety Strategy: CF Industries Debt Financing Safety very solid
| SAFETY METRICS | August 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| LEVERAGE | ||||||||
| LEVERAGE | 81 |
|
||||||
| REFINANCING | ||||||||
| REFINANCING | 49 |
|
||||||
| LIQUIDITY | ||||||||
| LIQUIDITY | 90 |
|
||||||
| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 94 |
|
||||||
ANALYSIS: With an Obermatt Safety Rank of 94 (better than 94% compared with alternatives) for 2024, the company CF Industries has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of CF Industries is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for CF Industries. Leverage is at a rank of 81, meaning the company has a below-average debt-to-equity ratio. It has less debt than 81% of its competitors. Liquidity is also good at a rank of 90, meaning the company generates more profit to service its debt than 90% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 49, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 51% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 94 (better than 94% compared with alternatives), CF Industries has a financing structure that is significantly safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for CF Industries. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. ...read more
Combined financial peformance: CF Industries Above-Average Financial Performance
| COMBINED PERFORMANCE | August 15, 2024 | |||||||
|---|---|---|---|---|---|---|---|---|
| VALUE | ||||||||
| VALUE | 41 |
|
||||||
| GROWTH | ||||||||
| GROWTH | 36 |
|
||||||
| SAFETY | ||||||||
| SAFETY | 90 |
|
||||||
| COMBINED | ||||||||
| COMBINED | 71 |
|
||||||
ANALYSIS: With an Obermatt Combined Rank of 71 (better than 71% compared with investment alternatives), CF Industries (Fertilizers & Agricultural Chemicals, USA) shares have above-average financial characteristics compared with similar stocks. Shares of CF Industries are low in value (priced high) with a consolidated Value Rank of 41 (worse than 59% of alternatives) and show below-average growth (Growth Rank of 36) but are safely financed (Safety Rank of 94), which means low debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 71, is a buy recommendation based on CF Industries's financial characteristics. As the company CF Industries's critical financial metrics exhibit below-average performance, such as low value (Obermatt Value Rank of 41) and low growth (Obermatt Growth Rank of 36), it is a somewhat questionable stock investment, where the risk of paying too much for the shares is significant, unless the company has an exceptionally bright future. In this case, good financing practices (Obermatt Safety Rank of 94) are a positive sign, because it may allow the company to weather challenging times until the hoped-for cash flows materialize. This may be true for high-tech or biotechnology companies with enough cash to sustain prolonged business development. If they own properties that only provide cash flows in the future, the stock may look excessively expensive and unattractive today. In such cases, the Obermatt Method has limited value, as it is based on facts we can observe today. If the facts lie all in the future, stock investing becomes guesswork, and this should only be a driver in a limited number of investments that account for a small fraction of a safe portfolio. ...read more
Obermatt Portfolio Performance
We’re so convinced about our research, that we buy our stock tips.
See the performance of the Obermatt portfolio.