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Why Is Air Products (APD) Down 2.7% Since the Last Earnings Report?

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More than a month has gone by since the last earnings report for Air Products and Chemicals, Inc. (APD - Free Report) . Shares have lost about 2.7% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Air Products’ Q3 Earnings & Revenues Beat Estimates

Air Products logged third-quarter fiscal 2017 (ended Jun 30, 2017) adjusted earnings of $1.65 per share, up 15% from the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of $1.60.

Net income from continuing operations, as reported, fell 58% year over year to $104 million or $0.47 per share. Cost of sales for the reported quarter rose roughly 12.6% year over year to around $1.5 billion. Selling and administrative expenses increased 9.6% year over year to $184.5 million.

Revenues rose 11% year over year to $2.12 billion in the reported quarter, beating the Zacks Consensus Estimate of $2.05 billion. An 8% increase in volumes and 5% favorable energy pass-through more than offset the currency headwinds of 2% in the quarter.

Segmental Highlights
 
Revenues from the Industrial Gases – America segment grew 12% year over year to $930 million in the reported quarter, supported by 9% rise in energy pass-through and 3% increase in volumes.
 
Sales from the Industrial Gases – EMEA segment rose 5% year over year to $542 million due to 6% higher volumes and 4% favorable energy pass-through, partly offset by 4% unfavorable currency and 1% lower pricing.
 
Sales from the Industrial Gases – Asia segment went up 20% year over year to $538 million on the back of 20% increase in volumes.

Financial Position
 
Air Products ended third-quarter fiscal 2017 with cash and cash equivalents of $2,332.6 million, a whopping 353.1% year over year surge. Total long-term debt fell around 14.2% year over year to $ 3,366.6 million.
 
Outlook                                                                     
 
Air Products has increased its adjusted earnings per share guidance for the full year. For fiscal 2017, Air Products expects adjusted earnings per share of $6.20–$6.25 (up from $6.00-$6.25 expected earlier), which at midpoint, represents a 10% increase over last year. For the fourth-quarter fiscal 2017, Air Products anticipates adjusted earnings per share from continuing operations of $1.65–$1.70 per share, which at midpoint, also represents a 12% increase over last year.
 
The company expects capital expenditures of roughly $1 billion in fiscal 2017.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

VGM Scores

At this time, the stock has a poor Growth Score of F, while its Momentum is doing a lot better with a B. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

The company's stock is more suitable for momentum than value investors.

Outlook

The stock has a Zacks Rank #2 (Buy). We are expecting an above average return from the stock in the next few months.


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