Just as CF Industries (CF -0.93%) stock hit its 52-week high in early April, Citigroup and Barclays sounded the warning bell with rating downgrades. The stock has given up nearly 9% since, leaving investors wondering whether there's any upside left. They may have an answer this week when the nitrogen specialist reports its first-quarter numbers Wednesday.

The Street isn't expecting much from CF Industries, though, despite PotashCorp (POT) beating Street estimates and CVR Partners (UAN -0.14%) turning in a good quarter in their respective last quarters. Nonetheless, CF's first-quarter report is critical for several reasons; so investors need to pay close attention.

Why CF Industries could beat the Street on the top...
Analysts see CF Industries' first-quarter revenue dropping 11% year over year. That isn't surprising, given the recent drop in fertilizer prices. PotashCorp realized 21% lower prices for its nitrogen products (primarily ammonia and urea) during its first quarter.

Fortunately, CF can adjust its product mix according to market situations, allowing it to partly balance out weakness in nutrient markets. Accordingly, I'd expect to see urea ammonium nitrate, or UAN form the bulk of CF's Q1 sales volumes versus ammonia and urea since UAN prices didn't weaken as much as those of other nitrogen compounds in recent months. For perspective, CVR Partners reported 14% lower selling prices for UAN in its first quarter versus 28% lower prices for ammonia.

Moreover, both PotashCorp and CVR Partners reported higher nitrogen sales volumes in the last quarter, indicating healthy demand prior to the U.S. spring planting season. As North America's leading nitrogen producer, CF Industries should have seen good volumes in Q1 as well. So I wouldn't be surprised if it even beats Street estimates on its top line this Wednesday.

... as well as the bottom
Unfortunately, CF Industries' Q1 profits could take a big hit as prices of key input, natural gas surged during the first quarter, even crossing $6 per MMBtu at one point in February. Higher cost is perhaps the major factor why analysts project CF's Q1 earnings per share to slip 25% year over year.

But again, CF may top Street estimates for two reasons -- It had hedged 75% of its Q1 natural gas requirement at an average price of $3.66 per MMBtu and also repurchased shares during the quarter, which should've boosted its EPS.

What you should watch for
I'd urge investors to pay greater attention to CF's ongoing internal restructuring moves in its upcoming earnings report. The first quarter marked the beginning of a new journey for the company as it offloaded its phosphate business to Mosaic for net consideration of $1 billion. CF has now turned into a pure nitrogen play, and how beneficial the move will be remains to be seen.

In CF's upcoming earnings call, investors should look for updates on how the company's business structure, financial reporting, and financial structure changes post the sale of its phosphate division.

Also, pay attention to CF's balance sheet and cash flow metrics in the upcoming earnings report. CF raised $1.5 billion in debt during the first quarter, which should increase its interest outgo in the future. At the same time, the company plans to return a good portion of the additional cash, raised from the Mosaic sale and debt, to shareholders in the form of dividends and share buybacks after taking care of its capital expenditure spending. So look for any hints of dividend increases coming your way this year in CF's earnings call.

Foolish takeaway
CF Industries may not deliver a great first quarter, but chances of a beat look bright, which could send CF shares higher. That said, delayed spring planting in the U.S. could still put pressure on its share prices. I'd encourage investors to focus more on the company's long-term plans and projections when it reports numbers this week, especially since CF Industries still remains one of the better fertilizer bets out there. Check back at Fool.com for more updates and analysis on the company next week.