Is CF Industries Holdings, Inc. overvalued or undervalued?

As of 7 May 2025, CF Industries Holdings, Inc. has moved from a fair to an attractive valuation grade, indicating a shift towards being undervalued. The company currently exhibits a P/E ratio of 9, which is significantly lower than the peer average of 10.39 for similar companies, suggesting it is trading at a discount. Additionally, its EV to EBITDA ratio stands at 5.74, compared to the industry average of 6.32, further supporting the undervaluation thesis. The PEG ratio of 0.42 also highlights that the stock is priced favorably relative to its growth potential.
In comparison to peers, The Mosaic Co. is deemed expensive with a P/E of 25.19, while FMC Corp. is categorized as very attractive with a P/E of 15.22. CF Industries' strong return on equity (ROE) of 33.65% and return on capital employed (ROCE) of 31.21% reflect its operational efficiency and profitability, reinforcing the undervaluation perspective. Notably, the company's stock has outperformed the S&P 500 over the past year, returning 32.03% compared to the index's 10.26%, which may indicate strong investor confidence in its future prospects.