NYSE:CF is probably undervalued for the fundamentals it is displaying.

Last update: Apr 5, 2024

Our stock screener has spotted CF INDUSTRIES HOLDINGS INC (NYSE:CF) as an undervalued stock with solid fundamentals. NYSE:CF shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

Understanding NYSE:CF's Valuation Score

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:CF has received a 7 out of 10:

A Price/Earnings ratio of 10.35 indicates a reasonable valuation of CF.
Based on the Price/Earnings ratio, CF is valued cheaper than 85.54% of the companies in the same industry.
The average S&P500 Price/Earnings ratio is at 25.77. CF is valued rather cheaply when compared to this.
Based on the Price/Forward Earnings ratio, CF is valued a bit cheaper than 75.90% of the companies in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 22.16, CF is valued a bit cheaper.
Based on the Enterprise Value to EBITDA ratio, CF is valued cheaper than 89.16% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, CF is valued cheaply inside the industry as 90.36% of the companies are valued more expensively.
The excellent profitability rating of CF may justify a higher PE ratio.

Evaluating Profitability: NYSE:CF

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NYSE:CF has achieved a 9:

CF has a Return On Assets of 10.61%. This is amongst the best in the industry. CF outperforms 90.36% of its industry peers.
With an excellent Return On Equity value of 26.67%, CF belongs to the best of the industry, outperforming 92.77% of the companies in the same industry.
The Return On Invested Capital of CF (13.40%) is better than 92.77% of its industry peers.
CF had an Average Return On Invested Capital over the past 3 years of 21.67%. This is significantly above the industry average of 7.47%.
The 3 year average ROIC (21.67%) for CF is well above the current ROIC(13.40%). The reason for the recent decline needs to be investigated.
With an excellent Profit Margin value of 23.00%, CF belongs to the best of the industry, outperforming 95.18% of the companies in the same industry.
CF's Profit Margin has improved in the last couple of years.
CF has a better Operating Margin (34.49%) than 93.98% of its industry peers.
CF's Operating Margin has improved in the last couple of years.
CF's Gross Margin of 38.38% is fine compared to the rest of the industry. CF outperforms 79.52% of its industry peers.
CF's Gross Margin has improved in the last couple of years.

What does the Health looks like for NYSE:CF

ChartMill utilizes a Health Rating to assess stocks, scoring them on a scale of 0 to 10. This rating takes into account a variety of liquidity and solvency ratios, both in absolute terms and in comparison to industry peers. NYSE:CF has earned a 9 out of 10:

Looking at the Altman-Z score, with a value of 2.74, CF is in the better half of the industry, outperforming 74.70% of the companies in the same industry.
CF has a debt to FCF ratio of 1.31. This is a very positive value and a sign of high solvency as it would only need 1.31 years to pay back of all of its debts.
CF's Debt to FCF ratio of 1.31 is amongst the best of the industry. CF outperforms 90.36% of its industry peers.
Although CF does not score too well on debt/equity it has very limited outstanding debt, which is well covered by the FCF. We will not put too much weight on the debt/equity number as it may be because of low equity, which could be a consequence of a share buyback program for instance. This needs to be investigated.
CF has a Current Ratio of 3.81. This indicates that CF is financially healthy and has no problem in meeting its short term obligations.
With an excellent Current ratio value of 3.81, CF belongs to the best of the industry, outperforming 89.16% of the companies in the same industry.
CF has a Quick Ratio of 3.44. This indicates that CF is financially healthy and has no problem in meeting its short term obligations.
CF's Quick ratio of 3.44 is amongst the best of the industry. CF outperforms 90.36% of its industry peers.

Assessing Growth Metrics for NYSE:CF

ChartMill assigns a proprietary Growth Rating to each stock. The score is computed by evaluating various growth aspects, like EPS and revenue growth. We take into account the history as well as the estimated future numbers. NYSE:CF was assigned a score of 4 for growth:

The Earnings Per Share has been growing by 47.09% on average over the past years. This is a very strong growth
CF shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 8.41% yearly.

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For an up to date full fundamental analysis you can check the fundamental report of CF

Disclaimer

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.