Bull of the Day: CF Industries (CF)

CF Industries (CF), a Zacks Rank #1 (Strong Buy), is one of the largest producers and distributors of nitrogen-based fertilizers in the world and a dominant supplier across North America. The company’s core products include ammonia, granular urea, urea ammonium nitrate solution (UAN), and ammonium nitrate, which are essential inputs for global crop production.

The stock has shown bullish momentum to start the year as the fertilizer sector turns more constructive heading into 2026, with investors looking past recent softness toward tightening nutrient balances and a recovery in demand.

That shift is already showing up in the numbers, as earnings estimates move higher and CF stands out as a preferred way to gain exposure to a strengthening fertilizer cycle.

About the Company

Founded in 1946 and headquartered in the Chicago area, CF serves agricultural and industrial customers across North America and global markets.

CF operates two of the largest nitrogen fertilizer complexes on the continent, located in Donaldsonville, Louisiana and Medicine Hat, Alberta, giving it scale, logistical advantages, and low-cost production tied to North American natural gas.

Beyond fertilizers, CF produces hydrogen and nitrogen-based products for industrial uses including emissions abatement, energy, and diesel exhaust fluid. The company became the global leader in nitrogen fertilizers after acquiring Terra Industries in 2010 and later sharpened its focus by divesting its phosphate business to Mosaic in 2014, while retaining a long-term ammonia supply agreement.

The company is valued at $13 billion and has a Forward PE of 12. The stock has Zacks Style Scores of “A” in Value, as well as a “B” in Momentum and Growth. The stock also pays a 2.3% dividend.

Investors Get Bullish on Fertilizers

The fertilizer space is quietly flipping bullish again after a multiyear digestion phase, with improving fundamentals across potash, nitrogen, and phosphate markets.

Morgan Stanley’s recent upgrade of Nutrien (NTR) to Overweight is emblematic of a broader shift in thinking: nutrient markets appear tighter for longer, inventories are lean, and global application rates are finally catching up after years of soil nutrient drawdowns.

Potash shipment growth is now expected to extend into a fourth consecutive year, something not seen since the mid-2000s, while capacity utilization is projected to remain above 90 percent through at least 2028.

For CF Industries, this turn in the fertilizer cycle is particularly powerful. While the Morgan Stanley call focuses on potash and Nutrien, the same forces are bullish for nitrogen producers. Tight global nutrient balances mean farmers are less able to defer applications, especially for nitrogen, which must be applied annually and cannot be mined from soils for long.

CF’s scale, low cost North American production base, and heavy exposure to ammonia, UAN, and urea position it to benefit directly as pricing stabilizes and volumes remain firm.

Q3 Earnings Beat

CF Industries delivered a 6% Q3 earnings beat in November, with ammonia network utilization reaching 97 percent year to date. Third quarter maintenance executed as planned and full year production guidance left unchanged at 10 million tons of gross ammonia for 2025.

Management emphasized that global nitrogen supply demand remains tight, with low inventories and ongoing outages limiting availability. With that, demand stayed robust across North America, India, and Brazil.

Beyond the headline beat, several strategic items stood out that reinforce CF’s longer-term upside.

The Donaldsonville complex began full diesel exhaust fluid rail load out in August, setting a monthly shipment record and boosting high margin DEF sales. CF also highlighted progress on emissions reduction and monetization, including nitric acid abatement at Verdigris and CO2 dehydration and compression at Donaldsonville, which are already generating 45Q tax credits and enabling premium priced low carbon ammonia sales.

Management expects carbon capture, sequestration, and abatement projects to contribute $150 to $200 million of incremental annual free cash flow by the end of the decade, while capital spending remains within guidance.

CF Industries Holdings, Inc. Price and EPS Surprise

CF Industries Holdings, Inc. price-eps-surprise | CF Industries Holdings, Inc. Quote

Estimates Surge Ahead of EPS

The stock next reports earnings in the middle of February, with analysts continuing to hike estimates. Over the last 90 days since the most recent earnings report, estimates have moved sharply higher across all time frames.

For the current quarter, estimates have gone from $2.07 to $2.55, or 23%.

For next quarter, we see a smaller move of 7%, going from $1.99 to $2.12.

For the current year, another 7% jump estimates, going from $8.31 to $8.94.

Numbers go higher next year as well, with estimates going from $6.88 to $7.27, or 6%

With those estimates, analysts have set price targets well above the current trading level. Right after earnings both Wolfe Research and RBC reiterated their $95 targets.

The Technical Take

Unfortunately for CF investors the stock has gone sideways for five years. After hitting highs near $120 in 2022, the stock has been stuck around $80 level. The bulls made an attempt to break above the $100 level early last year, but that move failed and the stock fell back to $80.

The stock has recently ticked higher, moving above the 50-day moving average. The move challenges a Fibonacci resistance level at $86.50 and the October highs. A move above that level and the bulls should target that $100 mark again.

Longer-term, the bulls have some work to do to convince the rest of the market. A move over $100 would break long-term resistance and possibly help the stock extend to the $120 all-time highs.

In Summary

CF Industries offers a compelling fundamental setup as the fertilizer cycle begins to turn more constructive. Tight global nitrogen balances, low inventories, and improving demand visibility are aligning with CF’s scale, low-cost production base, and strong free cash flow generation.

With estimates moving higher, supportive industry dynamics forming into 2026, and management executing well across both core fertilizer and adjacent growth initiatives, CF stands out as a high-quality way to gain exposure to a recovering fertilizer market without relying on aggressive assumptions.

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This article originally published on Zacks Investment Research (zacks.com).

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