CF Industries Holdings, Inc.CFNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $257.88 per share(market-calibrated)

+147.3%

Upside to Fair Value

Current

$104.30

Pure Model

$269.95

Fair Value

$257.88

Bull Case

$305.23

Bear Case

$239.97

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

0.50%

Calibrated Growth

1.64%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $269.95.

What's Driving This Ratingfor CF

↓

CapEx normalizing toward maintenance

Historical CapEx is 8.34% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$335M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 35.40% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -7.87% revenue growth, fading to 2.25% by Year 10. Revenue reaches $7.7B (vs $7.1B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 175bps below the model's 2.25%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 76.93% indicates efficient cash generation. FCF reaches $2.8B by Year 10 (36.86% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.69

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.60%

Cost of Debt

Pre-tax Cost of Debt4.83%

Tax Rate19.70%

After-tax Cost of Debt3.88%

Equity Weight (E/V)81.07%

Debt Weight (D/V)18.93%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (81.07% × 7.60%) + (18.93% × 3.88%)

= 6.90%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$6.5B	$6.3B	$6.4B	$7.1B	$7.7B
EBIT	$2.3B	$2.2B	$2.3B	$2.5B	$2.7B
Tax	$455M	$440M	$446M	$492M	$538M
NOPAT	$1.9B	$1.8B	$1.8B	$2.0B	$2.2B
+ Depreciation	$816M	$790M	$800M	$882M	$965M
- Capex	$544M	$466M	$410M	$384M	$309M
- Δ NWC	-$20M	-$440,356.072	$13M	$11M	$6M
Free Cash Flow	$2.1B	$2.1B	$2.2B	$2.5B	$2.8B
Discount Factor	0.935	0.819	0.716	0.627	0.513
Present Value	$2.0B	$1.7B	$1.6B	$1.6B	$1.5B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$2.8B

Terminal Growth Rate2.25%

WACC6.90%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$62.6B

PV of Terminal Value$32.1B

Exit Multiple Method

Year 10 EBITDA$3.7B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$51.8B

PV of Terminal Value$26.6B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$16.4B

PV of Terminal Value$32.1B

Enterprise Value$48.5B

(-) Net Debt$2.0B

Equity Value$46.5B

Shares Outstanding162M

Price per Share$287.09

Exit Multiple Method

PV of Projected FCFs$16.4B

PV of Terminal Value$26.6B

Enterprise Value$42.9B

(-) Net Debt$2.0B

Equity Value$41.0B

Shares Outstanding162M

Price per Share$252.80

Pure Model Fair Value

$269.95

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
4.90%	$349.61	$374.47	$408.72	$458.93	$464.82
5.90%	$291.87	$305.46	$322.79	$345.61	$377.06
6.90%	$251.60	$259.88	$269.95	$282.44	$298.36
7.90%	$221.29	$226.70	$233.08	$240.70	$249.95
8.90%	$197.30	$201.03	$205.31	$210.30	$216.17

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$239.97

130.1% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.86

Base Case

$269.95

158.8% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 0.69

Bull Case

$305.23

192.6% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.59

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Basic Materials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-7.87%

Year 3 Revenue Growth-0.19%

Year 5 Revenue Growth6.17%

Year 7 Revenue Growth4.60%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin35.40%

Tax Rate19.70%

Historical Capex / Rev8.34%

Terminal Capex / Rev4.00%

NWC / Revenue3.60%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Basic Materials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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