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Praxair Hikes Gas Prices to Recover Costs & Fund Investment
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Industrial gas producer and supplier Praxair Inc. (PX - Free Report) recently hiked the prices of industrial and medical gases for its bulk gas customers in North America. The revised prices will be effective from Jan 1, 2017.
After the release of third-quarter 2016 results on Oct 27, shares of Praxair yielded a return of 5.9%, underperforming the return of 8.6% by the Zacks categorized Chemicals Diversified industry.
As revealed, prices of nitrogen, oxygen, argon, hydrogen, helium and carbon dioxide have been increased up to 15%. In addition, the company raised facility fees and rent by up to 15%.
Praxair cited increasing costs and the need to fund capital investments for improving its operations as the reason behind the rise in prices. Earlier, the company increased its industrial and medical gas prices in Jul 2016 to support rising costs and higher investment needs.
We believe Praxair’s profitability is highly dependent on costs of sales and expenses, as any unwarranted increase in these will lower the profitability and vice versa. However, increasing applications have been raising the demand for industrial gases over time, proving beneficial for companies like Praxair. Exiting the third quarter, the company had a solid backlog of $1.4 billion. In addition, Praxair boasts a diversified product portfolio and a large worldwide client base.
Despite the long-term positives, Praxair’s exposure to certain near-term headwinds, including unfavorable foreign currency movements, higher production costs, stiff competition, and high debt levels have restricted its growth momentum. For 2016, the company lowered its earnings guidance to $5.44–$5.51 per share range on the expectation of weaker manufacturing and metal volumes, especially in North America.
Currently, Praxair has a market capitalization of $35.2 billion and carries a Zacks Rank #4 (Sell). Over the last 60 days, Zacks Consensus Estimate for the company has decreased 0.9% to $5.48 per share for 2016 and by 2.3% to $5.92 per share for 2017.
FMC Corporation posted better-than-expected results in the last four quarters, with an average earnings surprise of 13.07%. Also, the earnings estimates for 2016 and 2017 have been revised upward over the past 60 days.
Koppers Holdings’ earnings for 2016 and 2017 have been revised upward in the last 60 days. Average earnings surprise is a positive 72.99% for the last four quarters.
Kronos Worldwide reported better-than-expected results in the last quarter, with a positive earnings surprise of 111.11%. In addition, earnings estimates for 2016 and 2017 improved over the past 60 days.
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Praxair Hikes Gas Prices to Recover Costs & Fund Investment
Industrial gas producer and supplier Praxair Inc. (PX - Free Report) recently hiked the prices of industrial and medical gases for its bulk gas customers in North America. The revised prices will be effective from Jan 1, 2017.
After the release of third-quarter 2016 results on Oct 27, shares of Praxair yielded a return of 5.9%, underperforming the return of 8.6% by the Zacks categorized Chemicals Diversified industry.
As revealed, prices of nitrogen, oxygen, argon, hydrogen, helium and carbon dioxide have been increased up to 15%. In addition, the company raised facility fees and rent by up to 15%.
Praxair cited increasing costs and the need to fund capital investments for improving its operations as the reason behind the rise in prices. Earlier, the company increased its industrial and medical gas prices in Jul 2016 to support rising costs and higher investment needs.
We believe Praxair’s profitability is highly dependent on costs of sales and expenses, as any unwarranted increase in these will lower the profitability and vice versa. However, increasing applications have been raising the demand for industrial gases over time, proving beneficial for companies like Praxair. Exiting the third quarter, the company had a solid backlog of $1.4 billion. In addition, Praxair boasts a diversified product portfolio and a large worldwide client base.
Despite the long-term positives, Praxair’s exposure to certain near-term headwinds, including unfavorable foreign currency movements, higher production costs, stiff competition, and high debt levels have restricted its growth momentum. For 2016, the company lowered its earnings guidance to $5.44–$5.51 per share range on the expectation of weaker manufacturing and metal volumes, especially in North America.
Currently, Praxair has a market capitalization of $35.2 billion and carries a Zacks Rank #4 (Sell). Over the last 60 days, Zacks Consensus Estimate for the company has decreased 0.9% to $5.48 per share for 2016 and by 2.3% to $5.92 per share for 2017.
PRAXAIR INC Price and Consensus
PRAXAIR INC Price and Consensus | PRAXAIR INC Quote
Some better-ranked chemical stocks include FMC Corporation (FMC - Free Report) , Koppers Holdings Inc. (KOP - Free Report) and Kronos Worldwide, Inc. (KRO - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
FMC Corporation posted better-than-expected results in the last four quarters, with an average earnings surprise of 13.07%. Also, the earnings estimates for 2016 and 2017 have been revised upward over the past 60 days.
Koppers Holdings’ earnings for 2016 and 2017 have been revised upward in the last 60 days. Average earnings surprise is a positive 72.99% for the last four quarters.
Kronos Worldwide reported better-than-expected results in the last quarter, with a positive earnings surprise of 111.11%. In addition, earnings estimates for 2016 and 2017 improved over the past 60 days.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>