CF Industries Holdings, Inc.’s CF shares have shot up 17.9% over the past six months. The company has also outperformed the Zacks Fertilizers industry’s 0.3% decline over the same time frame. CF has also topped the S&P 500’s roughly 10.5% rise over the same period.

Let’s take a look into the factors that are driving this fertilizer maker.

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Healthy Nitrogen Demand, Lower Gas Costs Aid CF Stock

CF Industries is gaining from the rising global demand for nitrogen fertilizers, which is driven by significant agricultural demand. Industrial demand for nitrogen has also recovered from the pandemic-related disruptions. Global demand is expected to remain strong in the near future due to recovering industrial demand and farmer economics. High levels of corn planted acres and low nitrogen channel inventories are expected to drive demand for nitrogen in North America. Demand for urea is also likely to remain strong in Brazil on higher corn acres. Demand in India is expected to be driven by favorable weather conditions for crop production.

Strong global nitrogen demand and reduced supply availability supported global nitrogen prices in the third quarter of 2024. CF, on its third-quarter call, said that it anticipates the global supply-demand balance to remain constructive, as inventories are believed to be below average globally while energy spreads remain significant between North America and high-cost production in Europe.

The company also stands to benefit from lower natural gas prices. It saw a decline in natural gas costs in the third quarter. The average cost of natural gas fell to $2.10 per MMBtu in the quarter from $2.54 per MMBtu in the year-ago quarter. The benefits of reduced gas costs are expected to continue in the fourth quarter.

Higher nitrogen prices are also expected to support the company’s top line. Per CF Industries, nitrogen prices globally were aided in the third quarter by strong global nitrogen demand and reduced supply availability due to natural gas shortages in Trinidad and Egypt, the absence of China from the urea export market and planned maintenance activities in the Middle East. CF gained from higher year over year average selling prices in the third quarter due to increased average selling prices for ammonia from lower global supply availability.

Earnings estimates for CF have also been going up over the past 60 days. The Zacks Consensus Estimate for 2024 has increased by 5.8%. The consensus estimate for 2025 has also been revised 3.6% upward over the same time frame. The favorable estimate revisions instill investor confidence in the stock.

CF Industries Holdings, Inc. Price and Consensus

CF Industries Holdings, Inc. price-consensus-chart | CF Industries Holdings, Inc. Quote

CF’s Zacks Rank & Other Key Picks

CF currently sports a Zacks Rank #1 (Strong Buy).

Other top-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, Methanex Corporation MEOH and Ingevity Corporation NGVT. While CRS sports a Zacks Rank #1, MEOH and NGVT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Carpenter Technology beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.1%. CRS’ shares have soared 155% in the past year. 

The Zacks Consensus Estimate for Methanex’s current-year earnings has increased by 20.7% in the past 60 days. MEOH beat the consensus estimate in each of the last four quarters with the average surprise being 101%. 

Ingevity beat the consensus estimate in three of the trailing four quarters. In this time frame, it has delivered an earnings surprise of roughly 95.4%, on average. The consensus estimate for NGVT’s current year earnings has increased 15.9% in the past 60 days.

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