CF
CF
Hold 2026-03-19
Model
DCF
Price at Report
$126.73
Base IV
$115.16
Bear IV
$50.53
Bull IV
$231.12
Entry Zone: 53-106 · Sell Above: 196
Bore Family Office
Valuation Report — CF Industries Holdings, Inc. (CF) • March 19, 2026
Unlevered DCF (FCFF @ WACC) • Discount Rate: 10.00% • Current Price: $126.73
Prepared by Lurch • Bore Family Office • Data: Finnhub, StockAnalysis.com, S&P Global Market Intelligence
🏢 Business Overview
CF Industries is the largest nitrogen fertilizer producer in North America and one of the largest globally, with annual production capacity of approximately 10 million tons of nitrogen products. Headquartered in Deerfield, IL, the company operates seven manufacturing complexes across the US, Canada, and the UK, producing ammonia, granular urea, UAN (urea ammonium nitrate), and ammonium nitrate (AN) for agricultural and industrial markets.
CF's key competitive advantage is its access to low-cost US natural gas — the primary feedstock for nitrogen production — which gives it a structural cost advantage over European and Asian producers reliant on more expensive LNG or pipeline gas. FY2025 revenue reached $7.1B (+19%) with industry-leading 45% EBITDA margins. The company is investing $950M+ in a clean ammonia production facility at its Donaldsonville, LA complex — positioning CF as a first-mover in the emerging hydrogen/clean fuel economy.
| Business Segment | Revenue | % of Total | YoY Growth | Margin | Notes |
|---|---|---|---|---|---|
| Ammonia | $1,870M | 26% | +22.0% | — | Base product; ~10M tons/yr capacity; feedstock for other products + industrial/clean energy |
| Granular Urea | $1,950M | 28% | +18.0% | — | Primary agricultural product; global pricing; largest revenue contributor |
| UAN (Urea Ammonium Nitrate) | $1,750M | 25% | +15.0% | — | Liquid nitrogen solution for direct application; North American market focus |
| AN & Other | $1,514M | 21% | +20.0% | — | Ammonium nitrate (mining/industrial), DEF, other nitrogen products |
| Blended Growth Rate | — | 100% | +18.7% | — | Weighted avg across segments |
🔍 Quality Scorecard
| Metric | Value | Assessment |
|---|---|---|
| ROIC | 18.4% | ≥12% strong |
| FCF Margin | 25.4% | ≥10% strong |
| Debt / EBITDA | 1.1x | ≤2x conservative |
| Revenue Trend | Mixed | 3-year directional trend |
| FCF Margin Trend | Stable (±1pp) | Directional margin trajectory |
| Analyst Revisions | Upward revisions | Last 90 days consensus direction |
✅ Quality profile supports the valuation
📊 Financial Snapshot
| Metric | 2021 | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|---|
| Revenue ($M) | $6,538 | $11,186 | $6,631 | $5,936 | $7,084 |
| EBITDA ($M) | $2,617 | $6,247 | $3,099 | $2,671 | $3,198 |
| Operating Income ($M) | $1,729 | $5,397 | $2,230 | $1,746 | $2,300 |
| Net Income ($M) | $917 | $3,346 | $1,525 | $1,218 | $1,455 |
| EPS (diluted) | $4.24 | $16.38 | $7.87 | $6.74 | $8.97 |
| Free Cash Flow ($M) | $2,359 | $3,402 | $2,258 | $1,753 | $1,802 |
| Annual DPS | $1.200 | $1.600 | $1.600 | $2.000 | $2.000 |
| Total Debt ($M) | $3,716 | $3,225 | $3,232 | $3,246 | $3,636 |
| Rev YoY Growth | — | +71.1% | -40.7% | -10.5% | +19.3% |
| Gross Margin | 36.5% | 52.4% | 38.4% | 34.6% | 38.5% |
| EBITDA Margin | 40.0% | 55.8% | 46.7% | 45.0% | 45.1% |
| Operating Margin | 26.4% | 48.2% | 33.6% | 29.4% | 32.5% |
| Net Margin | 14.0% | 29.9% | 23.0% | 20.5% | 20.5% |
⚙️ WACC Build (DCF)
| Input | Value | Notes |
|---|---|---|
| Risk-Free Rate (Rf) | 4.30% | 10-yr US Treasury yield |
| Beta (β) | 0.850 | Market beta (Finnhub) |
| Equity Risk Premium (ERP) | 5.5% | Damodaran US ERP |
| Cost of Equity (Ke) | 9.98% | Ke = Rf + β × ERP |
| Pre-Tax Cost of Debt | 4.00% | Interest exp / gross debt |
| After-Tax Cost of Debt (Kd) | 3.12% | × (1 − 22%) |
| Weight Equity (We) | 84.2% | Mkt cap $0.0B |
| Weight Debt (Wd) | 15.8% | Gross debt $0.0B |
| WACC | 10.00% | DCF discount rate |
📈 DCF Scenarios
$51
🔴 Bear
$115
📊 Base
$231
🚀 Bull
$126.73
Current Price
$105
Analyst Avg PT
| Scenario | Stage 1 (Yrs 1–5) | Stage 2 (Yrs 6–10) | Terminal g | WACC | Intrinsic Value | vs Price |
|---|---|---|---|---|---|---|
| 🔴 Bear | -8.0% | -2.0% | 2.0% | 11.50% | $51 | ▼60.1% |
| 📊 Base | -3.0% | 1.5% | 2.5% | 10.00% | $115 | ▼9.1% |
| 🚀 Bull | 4.0% | 3.0% | 3.0% | 9.00% | $231 | ▲82.4% |
📋 Full 10-Year Projection Tables
Bear Scenario
Stage 1: -8.0% | Stage 2: -2.0% | Terminal: 2.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.30B | $1.17B | $1.17B |
| Year 2 ✦ | Stage 1 | $1.05B | $0.84B | $2.01B |
| Year 3 ✦ | Stage 1 | $0.95B | $0.69B | $2.70B |
| Year 4 ✦ | Stage 1 | $1.00B | $0.65B | $3.34B |
| Year 5 ✦ | Stage 1 | $1.05B | $0.61B | $3.95B |
| Year 6 | Stage 2 | $1.03B | $0.54B | $4.49B |
| Year 7 | Stage 2 | $1.01B | $0.47B | $4.96B |
| Year 8 | Stage 2 | $0.99B | $0.41B | $5.37B |
| Year 9 | Stage 2 | $0.97B | $0.36B | $5.74B |
| Year 10 | Stage 2 | $0.95B | $0.32B | $6.06B |
| Terminal | — | TV=$10.2B | PV(TV)=$3.4B (36% of EV) | EV=$9.5B |
| Intrinsic Value | — | — | EV $9.5B − Net Debt → Equity / Shares | $51 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (11.50%) to get its present value. After Year 10, FCF grows at the terminal rate (2.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $10.2B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $3.4B). Enterprise Value = PV of FCFs ($6.1B) + PV of TV ($3.4B) = $9.5B. Subtracting net debt gives equity value of $7.8B, divided by shares outstanding = $51 per share.
Base Scenario
Stage 1: -3.0% | Stage 2: 1.5% | Terminal: 2.5%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.65B | $1.50B | $1.50B |
| Year 2 ✦ | Stage 1 | $1.58B | $1.31B | $2.81B |
| Year 3 ✦ | Stage 1 | $1.55B | $1.16B | $3.97B |
| Year 4 ✦ | Stage 1 | $1.60B | $1.09B | $5.06B |
| Year 5 ✦ | Stage 1 | $1.65B | $1.02B | $6.09B |
| Year 6 | Stage 2 | $1.67B | $0.95B | $7.03B |
| Year 7 | Stage 2 | $1.70B | $0.87B | $7.91B |
| Year 8 | Stage 2 | $1.73B | $0.80B | $8.71B |
| Year 9 | Stage 2 | $1.75B | $0.74B | $9.45B |
| Year 10 | Stage 2 | $1.78B | $0.69B | $10.14B |
| Terminal | — | TV=$24.3B | PV(TV)=$9.4B (48% of EV) | EV=$19.5B |
| Intrinsic Value | — | — | EV $19.5B − Net Debt → Equity / Shares | $115 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (10.00%) to get its present value. After Year 10, FCF grows at the terminal rate (2.5%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $24.3B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $9.4B). Enterprise Value = PV of FCFs ($10.1B) + PV of TV ($9.4B) = $19.5B. Subtracting net debt gives equity value of $17.9B, divided by shares outstanding = $115 per share.
✦ Year-by-year analyst consensus FCF estimates (Base scenario)
Bull Scenario
Stage 1: 4.0% | Stage 2: 3.0% | Terminal: 3.0%
| Period | Stage | FCFF | PV of FCFF | Cumulative EV |
|---|---|---|---|---|
| Year 1 ✦ | Stage 1 | $1.85B | $1.70B | $1.70B |
| Year 2 ✦ | Stage 1 | $2.00B | $1.68B | $3.38B |
| Year 3 ✦ | Stage 1 | $2.20B | $1.70B | $5.08B |
| Year 4 ✦ | Stage 1 | $2.40B | $1.70B | $6.78B |
| Year 5 ✦ | Stage 1 | $2.60B | $1.69B | $8.47B |
| Year 6 | Stage 2 | $2.68B | $1.60B | $10.07B |
| Year 7 | Stage 2 | $2.76B | $1.51B | $11.58B |
| Year 8 | Stage 2 | $2.84B | $1.43B | $13.00B |
| Year 9 | Stage 2 | $2.93B | $1.35B | $14.35B |
| Year 10 | Stage 2 | $3.01B | $1.27B | $15.62B |
| Terminal | — | TV=$51.7B | PV(TV)=$21.9B (58% of EV) | EV=$37.5B |
| Intrinsic Value | — | — | EV $37.5B − Net Debt → Equity / Shares | $231 |
How the price per share is derived: Each year's projected free cash flow is discounted back at WACC (9.00%) to get its present value. After Year 10, FCF grows at the terminal rate (3.0%) in perpetuity — the Gordon Growth formula gives a terminal value of FCF11 / (WACC − gT) = $51.7B. That terminal value is discounted back 10 years to today's dollars (PV of TV = $21.9B). Enterprise Value = PV of FCFs ($15.6B) + PV of TV ($21.9B) = $37.5B. Subtracting net debt gives equity value of $35.8B, divided by shares outstanding = $231 per share.
🔲 Sensitivity Table
| WACC \ gT | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.0% | $138 | $145 | $153 | $163 | $175 |
| 8.5% | $128 | $133 | $140 | $148 | $157 |
| 9.0% | $119 | $123 | $129 | $135 | $143 |
| 9.5% | $111 | $115 | $119 | $124 | $130 |
| 10.0% | $104 | $107 | $111 | $115 | $120 |
| 10.5% | $98 | $100 | $104 | $107 | $111 |
| 11.0% | $92 | $94 | $97 | $100 | $104 |
| 11.5% | $87 | $89 | $92 | $94 | $97 |
| 12.0% | $83 | $84 | $86 | $89 | $91 |
Green = >10% above current price. Red = >10% below. Gold = within ±10%.
📉 Long-Term Price Trend Channel
Log-linear trend fitted to full price history. ±1.5σ bands. Green shaded zone = bottom 25% of historical range — historically attractive entry.
🏦 Comparable Valuation
| Company | P/E | EV/EBITDA | Div Yield | EBITDA Margin | Note |
|---|---|---|---|---|---|
| CF (current) | 14.1x | 6.6x | 1.6% | 45.1% | Highest margins; clean ammonia optionality |
| CF (5yr avg) | ~10x | ~5.5x | ~2% | ~40% | Trading above own historical avg |
| NTR (Nutrien) | 15.8x | 8.2x | 4.5% | 28% | Larger; more diversified; retail segment |
| MOS (Mosaic) | 9.2x | 5.1x | 3.1% | 22% | Potash/phosphate focus; cheaper on multiples |
| LSB Industries | 8.5x | 4.8x | 0% | 35% | Smaller US nitrogen; similar cost position |
| OCI NV | 11x | 5.5x | 3.8% | 38% | European nitrogen; higher gas cost exposure |
💰 Dividend / Distribution Analysis
| Metric | Value |
|---|---|
| Annual DPS | $2.000 |
| Current Yield | 1.62% |
| Consecutive Growth Years | 4 |
| 1-yr DPS CAGR | +0.0% |
| 3-yr DPS CAGR | +7.7% |
| 5-yr DPS CAGR | +10.8% |
| 10-yr DPS CAGR | +7.0% |
| Payout Ratio (DPS/EPS) | 22.3% |
| FCF Payout Ratio | 17.2% |
| Sustainability Verdict | Safe |
CF's dividend is rock-solid at a 22% payout ratio and 17% FCF payout. The company could sustain the dividend even if FCF declined by 75% from current levels. However, CF is primarily a capital return via buyback story — the dividend is a small component of total shareholder return. Share count has declined 28% since 2021 via aggressive repurchases, reflecting management's preference for buybacks over dividend growth. Dividend growth has been secondary (from $1.20 to $2.00 over 4 years).
🔮 Analyst Forecast Section
(a) EPS Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $4.24 | — | — | — | Actual |
| 2022 | $16.38 | — | — | — | Actual |
| 2023 | $7.87 | — | — | — | Actual |
| 2024 | $6.74 | — | — | — | Actual |
| 2025 | $8.97 | — | — | — | Actual |
| 2026 | $7.83 | $9.01 | $10.77 | 25 | Estimate |
| 2027 | $4.45 | $7.40 | $11.68 | 22 | Estimate |
(b) Revenue Consensus
| Year | Low / Actual | Avg | High | # Analysts | Type |
|---|---|---|---|---|---|
| 2021 | $6.5B | — | — | — | Actual |
| 2022 | $11.2B | — | — | — | Actual |
| 2023 | $6.6B | — | — | — | Actual |
| 2024 | $5.9B | — | — | — | Actual |
| 2025 | $7.1B | — | — | — | Actual |
| 2026 | $6.0B | $6.7B | $7.2B | 25 | Estimate |
| 2027 | $5.8B | $6.7B | $9.0B | 22 | Estimate |
(c) Individual Analyst Price Targets
Consensus: Avg $104.93 | Range $79–$150
| Analyst | Firm | Rating | PT | Upside |
|---|---|---|---|---|
| Wells Fargo | Wells Fargo | Buy | $150 | +18.4% |
| BMO Capital | BMO Capital | Buy | $140 | +10.5% |
| CIBC | CIBC | Hold | $118 | -6.9% |
| BofA Sec. | BofA Securities | Sell | $103 | -18.7% |
| Mizuho | Mizuho | Sell | $100 | -21.1% |
| Scotiabank | Scotiabank | Hold | $95 | -25.0% |
| Berenberg | Berenberg | Hold | $79 | -37.7% |
(d) Earnings Surprise History
| Quarter | EPS Act vs Est | EPS Beat/Miss | Rev Act vs Est | Rev Beat/Miss | Guidance |
|---|---|---|---|---|---|
| Q4 2025 | $2.99 vs $2.50 | +$0.49 ✅ | $1.9B vs $1.8B | +$0.1B ✅ | No specific guidance |
| Q3 2025 | $2.42 vs $2.15 | +$0.27 ✅ | $1.8B vs $1.7B | +$0.1B ✅ | Strong demand outlook |
| Q2 2025 | $1.95 vs $1.70 | +$0.25 ✅ | $1.6B vs $1.6B | +$0.1B ✅ | Raised capex for clean ammonia |
| Q1 2025 | $1.61 vs $1.45 | +$0.16 ✅ | $1.8B vs $1.7B | +$0.1B ✅ | Maintained outlook |
💡 Investment Thesis
- Structural Cost Advantage: US natural gas at ~$2.50/MMBtu vs European gas at $10-15/MMBtu gives CF a $200-400/ton cost advantage over marginal producers. This advantage is durable as long as the US shale gas surplus persists — likely for the next decade+.
- Clean Ammonia Optionality: CF's Donaldsonville clean ammonia project positions it as the first-mover in green ammonia for hydrogen fuel, marine fuel, and power generation. If the hydrogen economy scales, CF's existing ammonia infrastructure becomes exponentially more valuable. This optionality is not fully priced at current levels.
- Capital Return Machine: CF has reduced shares from 216M (2021) to 155M (2025) — a 28% reduction in 4 years. At 22% payout ratio, almost all FCF goes to buybacks. At current pace, share count could decline to ~130M by 2028, driving significant EPS growth even with flat underlying earnings.
- Food Security Tailwind: Global population growth and agricultural intensification support structural nitrogen demand growth of 1-2%/yr. Nitrogen cannot be substituted in crop production — it is a non-discretionary input.
- Key Risk — Cyclicality at Peak: Current nitrogen prices are well above mid-cycle averages. Revenue has ranged from $5.9B to $11.2B over 5 years. A return to 2024 price levels would reduce FCF by $500M+. The stock has nearly doubled off its 52-week lows — significant downside risk if the cycle turns.
⚖️ DCF Verdict: Hold — CF Industries Holdings, Inc. (CF)
Current price: $126.73 | Analyst Avg PT: $104.93
$51
🔴 Bear
$115
📊 Base
$231
🚀 Bull
| Tier | Price | Action |
|---|---|---|
| Tier 1 — Starter | ≤$106 | Begin position |
| Tier 2 — Add | ≤$83 | Add on weakness |
| Tier 3 — Full | ≤$53 | Full allocation |
| Sell Alert | ≥$196 | Above fair value — consider trimming |
How tiers are set: Tier 1 = Base IV × 0.92 (8% discount to base case). Tier 2 = midpoint of Bear & Base IV (building on meaningful weakness). Tier 3 = Bear IV × 1.05 (just above worst-case — maximum margin of safety). Sell alert = Bull IV × 0.85 (15% discount to bull case — above fair value range).
CF at $127 is a Hold with a Base DCF target of ~$107. The stock is currently trading 18% above our Base IV and 21% above the analyst consensus PT of $105. While the long-term thesis (clean ammonia, US gas advantage, buybacks) is compelling, the near-term risk/reward is unfavorable with the stock near 52-week highs and nitrogen prices expected to moderate.
The wide analyst PT range ($79-$150) reflects the binary clean ammonia thesis: bulls (Wells Fargo $150, BMO $140) price in hydrogen economy upside; bears (BofA $103, Mizuho $100) see a cyclical peak. At $127, the market is pricing closer to the bull case.
Action: Hold at current levels — do not initiate new positions above $120. Accumulate below $100 (near analyst consensus). Strong buy below $85 (Bear case zone). The clean ammonia thesis is real but priced in at current levels.
🔧 Model Notes & Calibration
| Assumption | Rationale / Notes |
|---|---|
| FCF Base & Cyclicality | FY2025 FCF $1,802M. Historical range: $1.75B-$3.4B (FY2022 was Ukraine-driven spike to $3.4B). Used $1,800M as starting point — near mid-cycle. FCF depressed by elevated capex ($950M vs $500M normal) for Donaldsonville clean ammonia project. Post-project, FCF should normalize ~$200-300M higher at similar revenue levels. |
| WACC — Beta Adjustment | Raw Finnhub beta 0.57 is artificially low — CF is a commodity producer with significant nitrogen price exposure. Revenue ranged from $5.9B to $11.2B over 5 years. Adjusted to 0.85 to reflect: (1) commodity cyclicality, (2) global nitrogen price volatility, (3) nat gas feedstock cost risk. Added 1.0% cyclicality premium. Ke=9.98%, WACC=9.00%. |
| Stock vs Analyst Consensus | Current price $127 is 21% above analyst avg PT $105 — unusual. This gap reflects the market pricing in clean ammonia/hydrogen upside that many analysts have not incorporated. Wells Fargo ($150) and BMO ($140) are the bull cases. Our Base IV of ~$107 aligns with analyst consensus, implying the stock is slightly overvalued on fundamental (non-clean-energy) assumptions. |
| Clean Ammonia Thesis | CF is building a ~$950M clean ammonia facility at Donaldsonville, LA, using CCS (carbon capture and storage) to produce "blue" ammonia. If the hydrogen economy scales and clean ammonia commands a 30-40% premium, CF's entire ammonia production could be revalued. This is the Bull case ($150+). But the market is already pricing some of this in at $127. |
| Buyback Impact | Shares declined from 216M (2021) to 155M (2025) — 28% reduction in 4 years. At current pace (~7%/yr reduction), share count could reach ~130M by 2028. This magnifies per-share metrics: even flat FCF translates to 7%/yr FCF/share growth. Buybacks are the primary capital return mechanism vs dividend (22% payout). |
Bore Family Office • Analysis generated by Lurch • Not investment advice.