Monsanto (MON) versus CF Industries (CF) Financial Review

Monsanto (NYSE: MON) and CF Industries (NYSE:CF) are both basic materials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, earnings, valuation and dividends.

Analyst Recommendations

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This is a summary of current ratings and recommmendations for Monsanto and CF Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monsanto 0 7 3 0 2.30
CF Industries 3 9 2 0 1.93

Monsanto presently has a consensus target price of $127.25, suggesting a potential upside of 8.62%. CF Industries has a consensus target price of $37.50, suggesting a potential upside of 1.57%. Given Monsanto’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Monsanto is more favorable than CF Industries.

Dividends

Monsanto pays an annual dividend of $2.16 per share and has a dividend yield of 1.8%. CF Industries pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. Monsanto pays out 39.9% of its earnings in the form of a dividend. CF Industries pays out 78.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Monsanto has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, CF Industries has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500.

Profitability

This table compares Monsanto and CF Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monsanto 16.38% 40.13% 11.53%
CF Industries 8.67% -0.92% -0.40%

Institutional & Insider Ownership

76.2% of Monsanto shares are owned by institutional investors. 0.8% of Monsanto shares are owned by insiders. Comparatively, 1.0% of CF Industries shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Monsanto and CF Industries’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Monsanto $14.64 billion 3.53 $2.26 billion $5.42 21.61
CF Industries $4.13 billion 2.09 $358.00 million $1.52 24.29

Monsanto has higher revenue and earnings than CF Industries. Monsanto is trading at a lower price-to-earnings ratio than CF Industries, indicating that it is currently the more affordable of the two stocks.

Summary

Monsanto beats CF Industries on 12 of the 16 factors compared between the two stocks.

Monsanto Company Profile

Monsanto Company (Monsanto), along with its subsidiaries, is a provider of agricultural products for farmers. The Company provides seeds, biotechnology trait products, herbicides and digital agriculture tools to farmers. The Company operates through two segments: Seeds and Genomics, and Agricultural Productivity. Through its Seeds and Genomics segment, the Company produces seed brands, including DEKALB, Asgrow, Deltapine, Seminis and De Ruiter, and it develops biotechnology traits that assist farmers in controlling insects and weeds and digital agriculture to assist farmers in decision-making. The Seeds and Genomics segment offers products, such as Germplasm and Biotechnology traits. Through its Agricultural Productivity segment, the Company manufactures Roundup brand herbicides and other herbicides and provides lawn-and-garden herbicide products for the residential market.

CF Industries Company Profile

CF Industries Holdings, Inc. manufactures and distributes nitrogen fertilizer, and other nitrogen products. The Company’s nitrogen fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Its other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to the Company’s industrial customers, and compound fertilizer products (nitrogen, phosphorus and potassium or NPKs). The Company’s segments include ammonia, granular urea, UAN, AN and other. The Company’s ammonia segment produces anhydrous ammonia (ammonia), which is concentrated nitrogen fertilizer as it contains 82% nitrogen. The granular urea segment produces granular urea, which contains 46% nitrogen. The UAN segment produces urea ammonium nitrate solution. The Other segment includes DEF, urea liquor, nitric acid and NPKs. The Company’s primary nitrogen fertilizer products are ammonia, granular urea, UAN and AN.

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