Time To Buy CF Industries Stock?

CF Industries (NYSE:CF) stock looks attractive – making it a good pick to buy at its current price of around $100. We believe there are a couple of concerns with CF stock, despite which it seems attractive given that its current valuation looks very low.

We arrive at our conclusion by comparing the current valuation of CF stock with its operating performance over the recent years as well as its current and historical financial condition. Our analysis of CF Industries along key parameters of Growth, Profitability, Financial Stability, and Downturn Resilience shows that the company has a moderate operating performance and financial condition, as detailed below. However, for investors who seek lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

How Does CF Industries’ Valuation Look vs. The S&P 500?

Going by what you pay per dollar of sales or profit, CF stock looks cheap compared to the broader market.

• CF Industries has a price-to-sales (P/S) ratio of 2.6 vs. a figure of 3.0 for the S&P 500
• Additionally, the company’s price-to-free cash flow (P/FCF) ratio is 6.6 compared to 20.5 for S&P 500
• And, it has a price-to-earnings (P/E) ratio of 11.8 vs. the benchmark’s 26.4

How Have CF Industries’ Revenues Grown Over Recent Years?

CF Industries’ Revenues have grown marginally over recent years.

• CF Industries has seen its top line shrink at an average rate of 5.6% over the last 3 years (vs. increase of 5.5% for S&P 500)
• Its revenues have grown 0.7% from $6.1 Bil to $6.1 Bil in the last 12 months (vs. growth of 5.5% for S&P 500)
• Also, its quarterly revenues grew 13.1% to $1.7 Bil in the most recent quarter from $1.5 Bil a year ago (vs. 4.8% improvement for S&P 500)

How Profitable Is CF Industries?

CF Industries’ profit margins are much higher than most companies in the Trefis coverage universe.

• CF Industries’ Operating Income over the last four quarters was $1.9 Bil, which represents a high Operating Margin of 30.7% (vs. 13.2% for S&P 500)
• CF Industries’ Operating Cash Flow (OCF) over this period was $2.4 Bil, pointing to a high OCF Margin of 39.4% (vs. 14.9% for S&P 500)
• For the last four-quarter period, CF Industries’ Net Income was $1.3 Bil – indicating a high Net Income Margin of 21.8% (vs. 11.6% for S&P 500)

Does CF Industries Look Financially Stable?

CF Industries’ balance sheet looks strong.

• CF Industries’ Debt figure was $3.3 Bil at the end of the most recent quarter, while its market capitalization is $17 Bil (as of 6/13/2025). This implies a moderate Debt-to-Equity Ratio of 20.8% (vs. 19.9% for S&P 500). [Note: A low Debt-to-Equity Ratio is desirable]
• Cash (including cash equivalents) makes up $1.4 Bil of the $13 Bil in Total Assets for CF Industries.  This yields a strong Cash-to-Assets Ratio of 10.6% (vs. 13.8% for S&P 500)

How Resilient Is CF Stock During A Downturn?

CF stock has fared worse than the benchmark S&P 500 index during some of the recent downturns.

Inflation Shock (2022)

• CF stock fell 49.1% from a high of $118.35 on 26 August 2022 to $60.24 on 1 June 2023, vs. a peak-to-trough decline of 25.4% for the S&P 500
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is 99.93 on 15 June 2025

Covid Pandemic (2020)

• CF stock fell 55.7% from a high of $47.74 on 1 January 2020 to $21.14 on 18 March 2020, vs. a peak-to-trough decline of 33.9% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 24 February 2021

Global Financial Crisis (2008)

• CF stock fell 76.8% from a high of $33.92 on 17 June 2008 to $7.88 on 20 November 2008, vs. a peak-to-trough decline of 56.8% for the S&P 500
• The stock fully recovered to its pre-Crisis peak by 15 August 2011

Putting All The Pieces Together: What It Means For CF Stock

In summary, CF Industries’ performance across the parameters detailed above are as follows:

• Growth: Neutral
• Profitability: Very Strong
• Financial Stability: Strong
• Downturn Resilience: Very Weak
• Overall: Neutral

Taken together with its very low valuation, this makes the stock look attractive, which supports our conclusion that CF is a good stock to buy.

While CF stock looks promising, investing in a single stock can be risky. On the other hand, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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