What Are Investors Paying for CF Industries? – Market Realist – Market Realist

Your CF Industries Update: Fertilizer Prices Remain an Issue PART 9 OF 10

Earlier in this series, we learned that CF Industries (CF) earnings growth hasnt been stable and that it had negative adjusted EPS (earnings per share) in 4Q16, rendering the use of PE (price-to-earnings) ineffective in comparing its valuation.

In place of a PE multiple, well use the EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple for CF Industries and compare it with its peers valuations.

In the chart above, we compare CF Industries valuation multiple with its historical levels as well as with the peer (MOO) median. CFs peers include Agrium (AGU), PotashCorp (POT), and The Mosaic Company (MOS).

On June 13, 2017, CF Industries was trading at a forward EV-to-EBITDA multiple of 12.4x, close to itsYTD (year-to-date) median of 12.3x.The companys valuation reached a peak of 16.5xin January 2017. Its peers median forward EV-to-EBITDA stood at11.3x

Recently, CF Industries valuation multiples have been trending higher, indicating that the market is becoming optimistic about the stock for the coming 12 months. CF Industriesis strategically located in the United States, which remains a net importer of nitrogen fertilizers.

In the next article, well conclude this series with analysts recommendations on CF Industries.

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What Are Investors Paying for CF Industries? - Market Realist - Market Realist