Terra Nitrogen Company, L.P. (NYSE: TNH) and CF Industries Holdings (NYSE:CF) are both basic materials companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, risk, institutional ownership, valuation, dividends and profitability.

Profitability

This table compares Terra Nitrogen Company, L.P. and CF Industries Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Terra Nitrogen Company, L.P. 38.78% 43.15% 39.71%
CF Industries Holdings -9.98% -0.40% -0.17%

Dividends

Terra Nitrogen Company, L.P. pays an annual dividend of $6.40 per share and has a dividend yield of 8.3%. CF Industries Holdings pays an annual dividend of $1.20 per share and has a dividend yield of 4.2%. Terra Nitrogen Company, L.P. pays out 98.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CF Industries Holdings pays out -75.5% of its earnings in the form of a dividend. Terra Nitrogen Company, L.P. has raised its dividend for 4 consecutive years. Terra Nitrogen Company, L.P. is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Terra Nitrogen Company, L.P. has a beta of 0.05, suggesting that its stock price is 95% less volatile than the S&P 500. Comparatively, CF Industries Holdings has a beta of 1.17, suggesting that its stock price is 17% more volatile than the S&P 500.

Institutional & Insider Ownership

3.4% of Terra Nitrogen Company, L.P. shares are owned by institutional investors. 2.0% of Terra Nitrogen Company, L.P. shares are owned by company insiders. Comparatively, 1.0% of CF Industries Holdings shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Terra Nitrogen Company, L.P. and CF Industries Holdings’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Terra Nitrogen Company, L.P. $398.10 million 3.63 $196.10 million $6.47 11.97
CF Industries Holdings $3.71 billion 1.81 $895.00 million ($1.59) -18.13

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

Analyst Ratings

This is a breakdown of recent recommendations for Terra Nitrogen Company, L.P. and CF Industries Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Terra Nitrogen Company, L.P. 0 0 0 0 N/A
CF Industries Holdings 2 5 4 0 2.18

CF Industries Holdings has a consensus target price of $31.33, indicating a potential upside of 8.68%. Given CF Industries Holdings’ higher probable upside, analysts clearly believe CF Industries Holdings is more favorable than Terra Nitrogen Company, L.P..

Summary

Terra Nitrogen Company, L.P. beats CF Industries Holdings on 9 of the 15 factors compared between the two stocks.

Terra Nitrogen Company, L.P. Company Profile

Terra Nitrogen Company, L.P. (TNCLP) is a limited partnership that produces nitrogen fertilizer products. The Company’s principal products are anhydrous ammonia (ammonia) and urea ammonium nitrate solutions (UAN), which it manufactures at its facility in Verdigris, Oklahoma. Its nitrogen products are used primarily by farmers. For the year ended December 31, 2016, it had sold 2.2 million tons of nitrogen fertilizers. The Company has production facility, in Verdigris, Oklahoma. As of December 31, 2016, it had two ammonia plants, two nitric acid plants and two UAN plants. The Company conducts its operations through an operating partnership, Terra Nitrogen, Limited Partnership (TNLP). Terra Nitrogen GP Inc. is the general partner of both TNCLP and TNLP and owns a 0.025% general partner interest in each of TNCLP and TNLP. The General Partner is an indirect subsidiary of CF Industries Holdings, Inc., which is engaged in the manufacturing and distribution of nitrogen products.

CF Industries Holdings 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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