Analyzing CF Industries (CF) and American Vanguard (AVD)

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

Valuation & Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Vanguard $355.05 million 1.93 $20.27 million $0.57 40.26
CF Industries $4.13 billion 2.19 $358.00 million ($0.25) -155.20

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

Analyst Recommendations

This is a breakdown of recent recommendations for American Vanguard and CF Industries, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Vanguard 0 1 1 0 2.50
CF Industries 3 10 3 0 2.00

American Vanguard presently has a consensus target price of $25.50, suggesting a potential upside of 11.11%. CF Industries has a consensus target price of $38.36, suggesting a potential downside of 1.14%. Given American Vanguard’s stronger consensus rating and higher possible upside, equities analysts plainly believe American Vanguard is more favorable than CF Industries.

Profitability

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

Net Margins Return on Equity Return on Assets
American Vanguard 5.70% 5.74% 3.66%
CF Industries 8.67% -0.92% -0.40%

Insider and Institutional Ownership

76.8% of American Vanguard shares are held by institutional investors. 4.7% of American Vanguard shares are held by company insiders. Comparatively, 1.0% of CF Industries shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

American Vanguard has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500. Comparatively, CF Industries has a beta of 1.1, suggesting that its stock price is 10% more volatile than the S&P 500.

Dividends

American Vanguard pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. CF Industries pays an annual dividend of $1.20 per share and has a dividend yield of 3.1%. American Vanguard pays out 14.0% of its earnings in the form of a dividend. CF Industries pays out -480.0% 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

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

American Vanguard Company Profile

American Vanguard Corporation, through its subsidiaries, develops, manufactures, and markets specialty chemicals for agricultural, commercial, and consumer uses in the United States and internationally. The company manufactures and formulates chemicals, including insecticides, fungicides, herbicides, molluscicides, growth regulators, and soil fumigants in liquid, powder, and granular forms for crops, turf and ornamental plants, and human and animal health protection. It also markets and distributes end-use chemical and biological products for crop applications; and distributes technology based pesticide solutions for greenhouse and nursery production applications, as well as offers formulations, such as PCNB, chlorothalonil, and propiconazole. The company distributes its products through national distribution companies and buying groups or co-operatives; and through sales offices and sales force executives. American Vanguard Corporation was founded in 1969 and is headquartered in Newport Beach, California.

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.

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