CF Industries (CF) vs. Cosan (CZZ) Critical Review

CF Industries (NYSE: CF) and Cosan (NYSE:CZZ) are both mid-cap basic materials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

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This is a summary of current ratings and price targets for CF Industries and Cosan, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CF Industries 3 10 2 0 1.93
Cosan 0 2 1 0 2.33

CF Industries currently has a consensus target price of $37.54, suggesting a potential upside of 2.51%. Cosan has a consensus target price of $13.00, suggesting a potential upside of 27.20%. Given Cosan’s stronger consensus rating and higher possible upside, analysts clearly believe Cosan is more favorable than CF Industries.

Volatility & Risk

CF Industries has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Cosan has a beta of 2.36, meaning that its share price is 136% more volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CF Industries $4.13 billion 2.07 $358.00 million ($0.25) -146.48
Cosan $4.25 billion 0.64 $172.57 million $0.33 30.97

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

Profitability

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

Net Margins Return on Equity Return on Assets
CF Industries 8.67% -0.92% -0.40%
Cosan 4.03% 5.68% 1.73%

Insider and Institutional Ownership

23.5% of Cosan shares are held by institutional investors. 1.0% of CF Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

CF Industries pays an annual dividend of $1.20 per share and has a dividend yield of 3.3%. Cosan pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. CF Industries pays out -480.0% of its earnings in the form of a dividend. Cosan pays out 24.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. CF Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Cosan beats CF Industries on 9 of the 16 factors compared between the two stocks.

CF Industries Company Profile

CF Industries Holdings, Inc. manufactures and distributes nitrogen fertilizers and other nitrogen products worldwide. The company operates through Ammonia, Granular Urea, UAN, AN, Other, and Phosphate segments. Its principal nitrogen fertilizer products include ammonia, granular urea, urea ammonium nitrate, and ammonium nitrate. The company also offers diesel exhaust fluid, urea liquor, nitric acid, and aqua ammonia, as well as compound fertilizer products with nitrogen, phosphorus, and potassium. It offers products primarily to cooperatives, independent fertilizer distributors, farmers, and industrial users. CF Industries Holdings, Inc. was founded in 1946 and is headquartered in Deerfield, Illinois.

Cosan Company Profile

Cosan Limited (Cosan) is a holding company. The Company’s segments include Raizen Energia, Raizen Combustiveis, COMGAS, Cosan Logistica, Lubricants and Other business. The Company’s other business include other investments, in addition to the corporate activities. The Company offers Logistics services, including transportation, port loading and storage of sugar, leasing or lending of locomotives, wagons and other railway equipment, through its subsidiaries Rumo Logistica Operadora Multimodal S.A. (Rumo), logistic segment (Logistic). The Company is also engaged in production and distribution of lubricants, through its indirect subsidiaries Cosan Lubrificantes e Especialidades S.A. (Moove) and Comma Oil & Chemicals Ltd. (Comma), under the Mobil licensed trademark in Brazil, Bolivia, Uruguay and Paraguay, in addition to the European and Asian market using the Comma brand and corporate activities (Lubricants).

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