At US$80.41, Is CF Industries Holdings, Inc. (NYSE:CF) Worth Looking At Closely?

Today we're going to take a look at the well-established CF Industries Holdings, Inc. (NYSE:CF). The company's stock saw a double-digit share price rise of over 10% in the past couple of months on the NYSE. The recent share price gains has brought the company back closer to its yearly peak. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let’s examine CF Industries Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for CF Industries Holdings

What Is CF Industries Holdings Worth?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 6.6% below our intrinsic value, which means if you buy CF Industries Holdings today, you’d be paying a fair price for it. And if you believe that the stock is really worth $86.14, then there isn’t much room for the share price grow beyond what it’s currently trading. Furthermore, CF Industries Holdings’s low beta implies that the stock is less volatile than the wider market.

Can we expect growth from CF Industries Holdings?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of CF Industries Holdings, it is expected to deliver a negative earnings growth of -12%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What This Means For You

Are you a shareholder? CF seems fairly priced right now, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on CF for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The stock appears to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CF should the price fluctuate below its true value.

So while earnings quality is important, it's equally important to consider the risks facing CF Industries Holdings at this point in time. Be aware that CF Industries Holdings is showing 2 warning signs in our investment analysis and 1 of those is concerning...

If you are no longer interested in CF Industries Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.