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Air Products (APD) Q3 Earnings: Will the Stock Surprise?
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Air Products & Chemicals, Inc. (APD - Free Report) is set to release third-quarter fiscal 2016 results, ahead of the bell on Jul 28.
Last quarter, the industrial gases giant delivered a positive earnings surprise of 1.11%. Air Products has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 2.84%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Air Products surpassed earnings expectations in second-quarter fiscal 2016 (ended Mar 31, 2016), backed by its restructuring and self-help actions. However, its sales fell year over year and lagged expectations.
The company expects earnings from continuing operations for third-quarter fiscal 2016 to be in the range of $1.87–$1.92 per share, up 13%−16% from the prior-year quarter. It also raised its earnings guidance for fiscal 2016 to the band of $7.40–$7.55 per share from the earlier view of $7.25–$7.50.
Given its leading position in the gases business, Air Products is well positioned to capitalize on the cyclical recovery in its core industrial end-markets. The company has built a strong project backlog. These projects are expected to be accretive to earnings and cash flow as they come on stream over the next few years.
Acquisitions and new business wins are expected to continue to drive the company’s results. Air Products is also keeping a tight control on SG&A expenses and undertaking work process improvement initiatives. The company is making a good progress with its $600 million cost-cutting program and has already achieved $300 million of cost savings.
However, sluggish global economic conditions may continue to hurt demand for the company’s products. Challenging conditions in Europe are expected to keep industrial gases volumes under pressure in the region. Moreover, Air Products generates a considerable amount of revenues outside the U.S., and is therefore, remains exposed to foreign exchange fluctuations.
Our proven model does not conclusively show that Air Products is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Air Products is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.91. The company’s ESP of 0.00% makes surprise prediction difficult.
Zacks Rank: Air Products carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
Stocks That Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
FMC Corp. (FMC - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #2 (Buy).
Huntsman Corp. (HUN - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank #1 (Strong Buy).
Alamos Gold, Inc. (AGI - Free Report) has an Earnings ESP of +100% and a Zacks Rank #3 (Hold).
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Air Products (APD) Q3 Earnings: Will the Stock Surprise?
Air Products & Chemicals, Inc. (APD - Free Report) is set to release third-quarter fiscal 2016 results, ahead of the bell on Jul 28.
Last quarter, the industrial gases giant delivered a positive earnings surprise of 1.11%. Air Products has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 2.84%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Air Products surpassed earnings expectations in second-quarter fiscal 2016 (ended Mar 31, 2016), backed by its restructuring and self-help actions. However, its sales fell year over year and lagged expectations.
The company expects earnings from continuing operations for third-quarter fiscal 2016 to be in the range of $1.87–$1.92 per share, up 13%−16% from the prior-year quarter. It also raised its earnings guidance for fiscal 2016 to the band of $7.40–$7.55 per share from the earlier view of $7.25–$7.50.
Given its leading position in the gases business, Air Products is well positioned to capitalize on the cyclical recovery in its core industrial end-markets. The company has built a strong project backlog. These projects are expected to be accretive to earnings and cash flow as they come on stream over the next few years.
Acquisitions and new business wins are expected to continue to drive the company’s results. Air Products is also keeping a tight control on SG&A expenses and undertaking work process improvement initiatives. The company is making a good progress with its $600 million cost-cutting program and has already achieved $300 million of cost savings.
However, sluggish global economic conditions may continue to hurt demand for the company’s products. Challenging conditions in Europe are expected to keep industrial gases volumes under pressure in the region. Moreover, Air Products generates a considerable amount of revenues outside the U.S., and is therefore, remains exposed to foreign exchange fluctuations.
AIR PRODS & CHE Price and EPS Surprise
AIR PRODS & CHE Price and EPS Surprise | AIR PRODS & CHE Quote
Earnings Whispers
Our proven model does not conclusively show that Air Products is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:
Zacks ESP: Earnings ESP for Air Products is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.91. The company’s ESP of 0.00% makes surprise prediction difficult.
Zacks Rank: Air Products carries a Zacks Rank #3 (Hold). Note that stocks with a Zacks Rank #1, 2 or 3 have a significantly higher chance of beating earnings. Conversely, Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.
Stocks That Warrant a Look
Here are some companies in the basic materials sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:
FMC Corp. (FMC - Free Report) has an Earnings ESP of +4.48% and a Zacks Rank #2 (Buy).
Huntsman Corp. (HUN - Free Report) has an Earnings ESP of +7.84% and a Zacks Rank #1 (Strong Buy).
Alamos Gold, Inc. (AGI - Free Report) has an Earnings ESP of +100% and a Zacks Rank #3 (Hold).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>