CF Industries Stock Soars 26% in 3 Months: Time to Buy Now?

Core Viewpoint - CF Industries Holdings, Inc. is experiencing significant growth due to rising nitrogen fertilizer demand and decreasing natural gas costs, leading to a strong performance in the stock market [1][3][10] Group 1: Stock Performance - CF's shares have increased by 26% over the past three months, outperforming the Zacks Fertilizers industry's growth of 4.7% [1] - Year-to-date, CF's stock has gained 10.9%, while the industry has declined by 12.6% [9] Group 2: Demand and Market Conditions - The company is benefiting from a robust global demand for nitrogen fertilizers, driven by agricultural needs and recovering industrial demand post-pandemic [3] - High corn planting acres and low nitrogen inventories in North America are expected to further boost nitrogen demand [3] - Strong demand for urea is anticipated in Brazil and India, supported by increased domestic production and favorable weather [3][4] Group 3: Financial Performance - CF reported a decline in natural gas costs, with the average price falling from $2.75 per MMBtu in the previous year to$1.90 per MMBtu in Q2 2024, positively impacting the cost of sales [4] - The company generated $475 million in net cash from operating activities in Q2 2024 and ended the quarter with approximately$1.8 billion in cash and cash equivalents [5] - CF has a $3 billion share repurchase program, with about$1.9 billion remaining, and returned $832 million to shareholders through dividends and share repurchases in the first half of 2024 [5][6] Group 4: Dividend and Valuation - CF offers a dividend yield of 2.3%, with a payout ratio of 35%, indicating a sustainable dividend [6] - The forward 12-month earnings multiple for CF is 15.47X, which is a 16.3% premium compared to the peer group average of 13.3X [8] Group 5: Earnings Estimates - The Zacks Consensus Estimate for CF's earnings in 2024 has been revised upward, indicating positive market sentiment [7]