CF Industries Holdings Inc (CF)

Conclusion

CF Industries Holdings produces ammonia and nitrogen fertilizers, including granular urea and urea ammonium nitrate, and sells mainly to cooperatives, retailers, distributors and industrial users in North America and Europe. As of 9 November 2026 the shares trade at 119.28 USD, giving a market capitalisation of 18.05 billion USD and an enterprise value of 18.89 billion USD.

The verdict is undervalued. The price-to-earnings ratio of 8.3 compares with a ten-year median of 17.5, enterprise value to EBITDA of 5.7 with 7.0, and price to book of 2.0 with 2.9. The DCF gives 250.64 USD per share at a discount rate of 8.9%, and the fair value from historical multiples is 148.42 USD. The fair value band runs from 159.62 to 239.44 USD with a midpoint of 199.53 USD, a margin of safety of 67.3% at the current price. The reverse DCF implies growth of -5.5% a year, while revenue grew 11.4% a year over five years and free cash flow per share grew 21.0% a year over the same period.

The strongest numbers are ROIC of 22.0% against a WACC of 8.5%, free cash flow conversion of 95.4% over the last twelve months, and a Piotroski score of 8 out of 9. The weakest are EPS growth of -18.2% a year over three years, a next-year EPS growth estimate of -23.6%, and a terminal value share of 56.2% of the DCF.

Financial health

Financial strength is green, held up by a net debt to EBITDA of 0.25, interest coverage of 8.9 and a current ratio of 2.98. The quick ratio is 2.53 and debt to equity is 0.41, both as of 30 September 2026. The Altman Z-score is not available because the inputs needed to compute it are missing. Insolvency risk: low, about 0.13% by the estimate of the Ohlson model over one to two years, based on balance sheet data as of 31 December 2025. The estimate is a model output, not a forecast of a specific event, and it does not replace a review of the debt schedule, which is not part of this analysis.

Earnings quality

Earnings quality is green. Free cash flow conversion is 95.4% over the last twelve months and 136.5% on a five-year basis, and the accrual ratio is -9.4%, which means cash generation runs ahead of reported earnings. Stock-based compensation is 0.5% of revenue, and free cash flow after it is 2.04 billion USD. The share count fell at a compound rate of 5.5% a year over five years, which reflects buybacks. The Piotroski score is 8 out of 9. The Beneish M-score is -2.79, a reading that is unlikely to indicate manipulation. The company beat earnings estimates in 6 of the last 8 quarters, with an average surprise of 12.4%. Estimates for the current year were cut by 8.3% over 90 days, with two downward revisions and one upward in the last 30 days, while next-year estimates rose 14.3% over 90 days.

Profitability

Profitability is green. The gross margin is 42.6% against a ten-year median of 30.2%, the operating margin is 29.8% against 25.0%, and the net margin is 27.5% against 12.4%. Operating margin stability is 47.8%. ROIC is 22.0% against a WACC of 8.5%, and the ROIC minus WACC value of 13.5% is classed as creating value. The five-year median ROIC is 27.8%. Return on equity is 24.5%, but the DuPont split for 2025 shows part of it comes from leverage: a net margin of 20.5%, an asset turnover of 0.50 and an equity multiplier of 2.91. The return is therefore driven mainly by margins rather than by borrowing.

Growth

Growth is yellow. Revenue grew at a compound rate of 11.4% over five years and 5.1% over ten years, but fell 14.1% a year over three years. Earnings per share grew 43.5% a year over five years and 11.7% over ten years, but declined 18.2% a year over three years. Free cash flow per share fell 12.6% a year over three years and rose 21.0% over five years. Revenue grew in 6 of the last 10 years. The next-year EPS growth estimate is -23.6%, so the recent decline is expected to continue in the near term.

Valuation

Valuation is green. The price-to-earnings ratio of 8.3 is a discount of 52.6% to its ten-year median of 17.5, and enterprise value to EBITDA of 5.7 is a discount of 18.9% to 7.0. Price to free cash flow of 8.7 is a premium of 4.9% to its median of 8.3, while price to sales of 2.3 is a discount of 2.3% to 2.3 and price to book of 2.0 is a discount of 31.0% to 2.9. The DCF gives 250.64 USD per share at a discount rate of 8.9%, with a terminal value share of 56.2%, so the result depends heavily on long-term assumptions. The reverse DCF implies growth of -5.5% a year. The fair value is an estimate built on fixed assumptions, not a price target. The dividend yield is 2.15%, the forward yield is 1.99%, and the payout is 18.6% of free cash flow.

Risks

The main risk is the decline in earnings. The three-year EPS decline of 18.2% a year and the next-year growth estimate of -23.6% would weigh on the company if they persisted, and they could reduce the return on the price at 119.28 USD if the valuation relies on a recovery. Downward revisions to current-year estimates of 8.3% add to that pressure. The DCF also depends on the terminal value, which makes up 56.2% of its result, so a change in the long-term growth or discount assumptions would move it substantially. The Altman Z-score is not available because its inputs are missing, and the insolvency estimate is a model output based on December 2025 balance sheet data. This analysis does not include a debt maturity schedule or revenue by segment, so it cannot assess refinancing timing or which business lines drive the revenue decline.