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Air Products (APD): What Will Q4 Earnings Release Unveil?
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Air Products & Chemicals, Inc. (APD - Free Report) is slated to release fourth-quarter fiscal 2016 results, ahead of the bell on Oct 27.
Last quarter, the industrial gases giant delivered a positive earnings surprise of 0.52%. Air Products has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 1.86%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Air Products' industrial gases business in the EMEA region is under pressure from a weak operating environment. Sluggish global economic conditions are likely to continue impacting the demand for the company’s productsThe company is also seeing lower volumes in Latin America due to weak demand. Volumes in packaged gases continue to be weak.
Air Products is also exposed to currency headwinds, stemming from weakening of most currencies against the U.S. dollar. Unfavorable currency translation weighed on its sales in the third quarter and is expected to remain a headwind in the fourth. The company currently sees currency headwinds of around 20 cents per share for fiscal 2016.
However, 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 estimated to be accretive to earnings and cash flow as they come on stream over the next few years.
Acquisitions, new business deals and strategic investments are also expected to support the company’s results in fiscal 2016. The acquisition of a 67% stake in Chilean industrial gas company, Indura S.A. has ushered in substantial growth opportunity for Air Product, placing it as Latin America’s second largest industrial gas producer. The acquisition opened up a $1.5 billion opportunity in Latin America, the second-highest growth region in the world following Asia.
Air Products is also keeping a tight control on expenses and undertaking work process improvement initiatives. The company remains on track in delivering on its cost reduction programs, which should support its margins.
Air Products has wrapped up the separation of its Electronics Materials Division through the spin-off of Versum Materials, Inc. Air Products will direct resources to grow its core and stable industrial gases business. These actions (part of the company’s strategic five-point plan) are expected to enable the company to achieve its goal of becoming the safest and most profitable industrial gas company globally and create shareholder value in the longer term.
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 +1.01%. This is because the Most Accurate estimate stands at $2.01 while the Zacks Consensus Estimate is pegged lower at $1.99. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Air Products carries a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some other companies in the basic materials sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
B2Gold Corp. (BTG - Free Report) has an Earnings ESP of +25% and carries a Zacks Rank #2 (Buy).
The Dow Chemical Company (DOW - Free Report) has an Earnings ESP of +1.25% and also carries a Zacks Rank #2.
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Air Products (APD): What Will Q4 Earnings Release Unveil?
Air Products & Chemicals, Inc. (APD - Free Report) is slated to release fourth-quarter fiscal 2016 results, ahead of the bell on Oct 27.
Last quarter, the industrial gases giant delivered a positive earnings surprise of 0.52%. Air Products has outperformed the Zacks Consensus Estimate in the trailing four quarters with an average beat of 1.86%. Let’s see how things are shaping up for this announcement.
Factors to Consider
Air Products' industrial gases business in the EMEA region is under pressure from a weak operating environment. Sluggish global economic conditions are likely to continue impacting the demand for the company’s productsThe company is also seeing lower volumes in Latin America due to weak demand. Volumes in packaged gases continue to be weak.
Air Products is also exposed to currency headwinds, stemming from weakening of most currencies against the U.S. dollar. Unfavorable currency translation weighed on its sales in the third quarter and is expected to remain a headwind in the fourth. The company currently sees currency headwinds of around 20 cents per share for fiscal 2016.
However, 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 estimated to be accretive to earnings and cash flow as they come on stream over the next few years.
Acquisitions, new business deals and strategic investments are also expected to support the company’s results in fiscal 2016. The acquisition of a 67% stake in Chilean industrial gas company, Indura S.A. has ushered in substantial growth opportunity for Air Product, placing it as Latin America’s second largest industrial gas producer. The acquisition opened up a $1.5 billion opportunity in Latin America, the second-highest growth region in the world following Asia.
Air Products is also keeping a tight control on expenses and undertaking work process improvement initiatives. The company remains on track in delivering on its cost reduction programs, which should support its margins.
Air Products has wrapped up the separation of its Electronics Materials Division through the spin-off of Versum Materials, Inc. Air Products will direct resources to grow its core and stable industrial gases business. These actions (part of the company’s strategic five-point plan) are expected to enable the company to achieve its goal of becoming the safest and most profitable industrial gas company globally and create shareholder value in the longer term.
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 +1.01%. This is because the Most Accurate estimate stands at $2.01 while the Zacks Consensus Estimate is pegged lower at $1.99. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.
Zacks Rank: Air Products carries a Zacks Rank #5 (Strong Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some other companies in the basic materials sector that you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
The Chemours Company (CC - Free Report) has an Earnings ESP of +25.71% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
B2Gold Corp. (BTG - Free Report) has an Earnings ESP of +25% and carries a Zacks Rank #2 (Buy).
The Dow Chemical Company (DOW - Free Report) has an Earnings ESP of +1.25% and also carries a Zacks Rank #2.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>