CF Industries Holdings, Inc. CF is benefiting from healthy nitrogen fertilizer demand in major markets and higher prices. It, however, remains hamstrung by headwinds from higher costs stemming from an uptick in natural gas prices.
Higher prices of natural gas, a key feedstock for nitrogen fertilizer, have resulted in increased production costs for CF. It saw a notable rise in natural gas costs during 2025. The average cost of natural gas increased to $3.31 per MMBtu (million metric British thermal unit) in 2025 from $2.40 per MMBtu a year ago.
The same for first-quarter 2026 increased to $4.57 per MMBtu from $3.68 per MMBtu a year ago, leading to a higher cost of sales. Natural gas prices have shot up in Europe and Asia due to constrained supply availability. Higher gas costs are expected to weigh on CF’s margins.
Among its peers, Nutrien Ltd. NTR remains exposed to a volatile input cost environment amid supply tightness. Nutrien uses sulfur, ammonia and natural gas as key inputs. NTR saw higher sulfur input costs in the first quarter, leading to a higher cost of goods sold per ton in the phosphate businesses, hurting margins. It expects further pressure on phosphate margins in the second quarter, resulting from higher sulfur and ammonia costs.
The Mosaic Company MOS is also buffeted by higher costs of inputs. Mosaic uses sulfur and ammonia as key inputs for the production of phosphate. It witnessed a sharp increase in sulfur price since late 2025, which weighed on phosphate margins in the first quarter. MOS expects an additional impact of the sulfur price inflation on the cost of goods sold in the second quarter.
CF’s Price Performance, Valuation & Estimates
CF Industries has gained 11.7% in the past year compared with the Zacks Fertilizers industry’s decline of 5.2%.
From a valuation standpoint, CF is currently trading at a forward 12-month earnings multiple of 7.15, a 34.1% discount relative to the industry average of 10.85X. It carries a Value Score of A.
The Zacks Consensus Estimate for CF’s 2026 and 2027 earnings implies a year-over-year rise of 83.1% and a decline of 34.9%, respectively. The EPS estimates for 2026 and 2027 have been trending higher over the past 60 days.
CF stock currently carries a Zacks Rank #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).