NEW YORK (TheStreet) --Shares of CF Industries Holdings Inc. (CF) are climbing higher by 5.75% to $270.50 on heavy volume in mid-afternoon trading on Tuesday, after it was announced the manufacturer and distributor of nitrogen and phosphate fertilizer products was in talks with Yara International ASA (YARIY) regarding a potential merger, the Wall Street Journal reports.
If it goes through, the merger would create the world's largest producer of nitrogen fertilizers, with over $18 billion in annual sales, the Journal added.
CF Industries and Yara International would have a combined market capitalization of $26.3 billion, the Journal noted.STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
The merger would help Norway-based Yara expand its presence in the U.S. market, while allowing CF Industries access to Yara's international distribution network, the Journal said.
The discussions over a possible merger are in the early stages and may not result in a transaction, Yara said in a statement on its website.
Shares of Yara International are higher by 4.23% to $51.29.
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Separately, TheStreet Ratings team rates CF INDUSTRIES HOLDINGS INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate CF INDUSTRIES HOLDINGS INC (CF) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to its closing price of one year ago, CF's share price has jumped by 25.46%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CF should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- 46.72% is the gross profit margin for CF INDUSTRIES HOLDINGS INC which we consider to be strong. Regardless of CF's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CF's net profit margin of 21.22% compares favorably to the industry average.
- CF, with its decline in revenue, underperformed when compared the industry average of 7.6%. Since the same quarter one year prior, revenues fell by 14.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Chemicals industry and the overall market, CF INDUSTRIES HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The debt-to-equity ratio of 1.02 is relatively high when compared with the industry average, suggesting a need for better debt level management. Despite the company's weak debt-to-equity ratio, the company has managed to keep a very strong quick ratio of 4.30, which shows the ability to cover short-term cash needs.
- You can view the full analysis from the report here: CF Ratings Report