Attractive Price-to-Earnings Ratio
Favorable Price-to-Free Cash Flow
Strong Return on Equity
Healthy Profit Margins
Strong Liquidity Position
Low Debt Levels
Strong Financial Performance
Low-Cost Manufacturing Advantage
Strategic Initiatives in Carbon Capture
Favorable Market Demand
Potential for Low-Carbon Ammonia Demand
Ongoing Capital Growth Projects
Moderate Price-to-Sales Ratio
Gross Profit Margin Concerns
Interest Coverage Ratio
CF Industries demonstrates a strong business model with solid financial performance, low-cost manufacturing, and strategic initiatives in sustainability. The future prospects are bright, with favorable demand conditions and ongoing projects that could enhance growth. Overall, the company's approach positions it well for long-term success.
Analysis Date: February 20, 2025
Last Updated: March 11, 2025
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
Benjamin Graham's value investing approach focuses on finding stocks with a significant margin of safety between their intrinsic value and market price.
Intrinsic Value
Estimated fair value based on Graham's formula
$270.74
Current Market Price: $70.23
IV/P Ratio: 3.86x (>1.0 indicates undervalued)
Margin of Safety
Gap between intrinsic value and market price
74.0%
Graham recommended a minimum of 20-30% margin of safety
Higher values indicate a greater potential discount to fair value
Graham Criteria Checklist
Benjamin Graham's value investing checklist for CF
Positive earnings (5+ years)
Dividend history (5+ years)
P/E ratio ≤ 20 (10.39)
P/B ratio ≤ 1.5 (1.67)
Current ratio ≥ 2.0 (3.08x)
Long-term debt < Net current assets (1.86x)
Margin of safety (74.0%)
CF does not meet all Graham criteria
Trailing Twelve Months (TTM) values provide a view of the company's performance over the last year.
A return on equity (ROE) of 20.57% shows that the company effectively generates profit from its equity, indicating efficient management and strong profitability.
With a net profit margin of 20.52%, the company demonstrates solid profitability, indicating that it retains a good portion of revenue as profit.
Although the gross profit margin is at 34.08%, it may not be sufficiently high compared to industry peers, indicating potential inefficiencies or pricing pressures.
Profitability metrics measure a company's ability to generate earnings relative to its revenue, operating costs, and other relevant metrics. Higher values generally indicate better performance.
Return on Equity (ROE)
Measures how efficiently a company uses its equity to generate profits
20.57%
Higher values indicate better returns for shareholders
TTM (as of 2025-04-16)
Return on Assets (ROA)
Measures how efficiently a company uses its assets to generate profits
2.44%
Higher values indicate better asset utilization
TTM (as of 2025-04-16)
Gross Profit Margin
Percentage of revenue retained after accounting for cost of goods sold
34.08%
Higher values indicate better efficiency in production
TTM (as of 2025-04-16)
Net Profit Margin
Percentage of revenue retained after accounting for all expenses
20.52%
Higher values indicate better overall profitability
TTM (as of 2025-04-16)
The current ratio of 3.08 indicates excellent liquidity, suggesting that the company can easily cover its short-term obligations.
A debt-to-equity ratio of 0.43 suggests that the company has a conservative capital structure, which minimizes financial risk.
While the interest coverage ratio is a healthy 16.15, it's important to monitor this in relation to potential increases in debt levels in the future.
Financial health metrics assess a company's ability to meet its financial obligations and its overall financial stability.
Debt to Equity Ratio
Total debt divided by total equity
0.32x
Lower values indicate less financial leverage and risk
Less than 1.0 is conservative, 1.0-2.0 is moderate, >2.0 indicates high risk
Q4 2024
Current Ratio
Current assets divided by current liabilities
3.08x
Higher values indicate better short-term liquidity
Less than 1.0 is concerning, 1.0-2.0 is adequate, greater than 2.0 is good
Q4 2024
CF Industries reported an adjusted EBITDA of $2.3 billion for the full year 2024, demonstrating a robust financial position. The company has returned $1.9 billion to shareholders through dividends and share repurchases, indicating strong cash flow generation.
The company operates a low-cost manufacturing system with the highest onstream factors in the industry, which enhances its competitive advantage and positions it well against peers.
CF Industries is advancing its carbon capture and sequestration project, which is expected to begin generating tax credits this year. This initiative positions the company as a leader in low-carbon ammonia production.
The company expects strong nitrogen demand due to low corn stocks and favorable planting conditions, with projections for robust planted corn acres in 2025.
CF Industries anticipates that there will be a growing demand for low-carbon ammonia, which will likely tighten the global supply-demand balance and create new market opportunities.
The potential final investment decision on the Blue Point complex could further enhance production capacity and returns, with strategic partnerships being formed.