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Here's Why Air Products Should Be in Your Portfolio Now
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Air Products and Chemicals, Inc. (APD - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Air Products, a Zacks Rank #2 (Buy) stock, has outperformed the industry it belongs to over the last three months. The company’s shares have moved up around 11.9% over this period, compared with roughly 10.9% gain recorded by the industry.
Let’s delve deeper into the factors that make this industrial gas giant an attractive investment option.
What's Working in Favor of APD?
Strong Q4 and Upbeat Outlook: Air Products topped earnings and revenue expectations in fourth-quarter fiscal 2017 (ended Sep 30, 2017). Its adjusted earnings for the quarter of $1.76 per share rose 18% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $1.69. Revenues rose 13% year over year to $2.2 billion in the quarter, beating the Zacks Consensus Estimate of $2.09 billion.
Air Products, in its fiscal fourth-quarter call, said that it expects adjusted earnings per share of $1.60-$1.70 for first-quarter fiscal 2018, up 9-16% from the year-ago quarter. For fiscal 2018, Air Products expects adjusted earnings per share of $6.85-$7.05, up 9-12% year over year.
Estimates Northbound: Annual estimates for Air Products have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2018 has increased by around 1.6% to $7.00 per share. The Zacks Consensus Estimate for fiscal 2019 has also moved up 4.4% over the same timeframe to $7.63.
Positive Earnings Surprise History: Air Products has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 2.6%.
Strong Balance Sheet: Air Products ended the fiscal fourth quarter with cash and cash equivalents of $3,273.6 million, a 153% year-over-year surge. Total long-term debt fell around 13% year over year to $3,402.4 million. The company remains committed to invest in its core industrial gases business leveraging its strong balance sheet to create significant value for its shareholders.
Growth Drivers: Air Products has a long-term (three-five years) expected earnings per share growth rate of roughly 12.1%, higher than the industry average of 10%. Air Products is well placed to leverage the cyclical recovery in core industrial end-markets. Moreover, strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018.
The company has also built a strong project backlog. These projects are expected to be accretive to earnings and cash flow over the next few years.
Air Products, in July, inked a long-term gas supply agreement with Huntsman Corporation (HUN - Free Report) . Under the deal, Air Products will build, own and operate a new steam methane reformer and cold box in Geismar, LA. Air Products facilities which will supply hydrogen, carbon monoxide and steam to Huntsman's Geismar operations are expected to be onstream in Jan 2020. The new state-of-the-art facility will provide high reliability and sustainability with enhanced energy efficiency and will help to lower emissions.
Air Products is also expanding in China. The company recently landed a second long-term oxygen and nitrogen supply contract with a leading global materials supplier in Guangdong in South China. The move will help to strengthen Air Products' position in the strategic industrial base as well as its relationship with this global customer. Air Products and Yankuang Group also recently entered into an agreement for a $3.5 billion coal-to-syngas production facility to be constructed in Yulin City, Shaanxi Province, China.
Air Products also remains on track in delivering on its cost reduction programs, which should support its margins. The company is making a good progress with its $600 million cost-cutting program and has already delivered more than $475 million of cost savings and plans to deliver the balance in next two-three years.
Moreover, Air Products has significant amount of cash to invest in its core industrial gases business. The company expects to have at least $8 billion to deploy in strategic, high-return opportunities (including acquisitions and large industrial gases projects) to create shareholders value over the next three years.
Air Products and Chemicals, Inc. Price and Consensus
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 43% year to date.
Kraton has an expected earnings growth of 25.4% for the current year. Its shares are up roughly 69% year to date.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Here's Why Air Products Should Be in Your Portfolio Now
Air Products and Chemicals, Inc. (APD - Free Report) stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Air Products, a Zacks Rank #2 (Buy) stock, has outperformed the industry it belongs to over the last three months. The company’s shares have moved up around 11.9% over this period, compared with roughly 10.9% gain recorded by the industry.
Let’s delve deeper into the factors that make this industrial gas giant an attractive investment option.
What's Working in Favor of APD?
Strong Q4 and Upbeat Outlook: Air Products topped earnings and revenue expectations in fourth-quarter fiscal 2017 (ended Sep 30, 2017). Its adjusted earnings for the quarter of $1.76 per share rose 18% from the year-ago quarter and surpassed the Zacks Consensus Estimate of $1.69. Revenues rose 13% year over year to $2.2 billion in the quarter, beating the Zacks Consensus Estimate of $2.09 billion.
Air Products, in its fiscal fourth-quarter call, said that it expects adjusted earnings per share of $1.60-$1.70 for first-quarter fiscal 2018, up 9-16% from the year-ago quarter. For fiscal 2018, Air Products expects adjusted earnings per share of $6.85-$7.05, up 9-12% year over year.
Estimates Northbound: Annual estimates for Air Products have moved north over the past two months, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2018 has increased by around 1.6% to $7.00 per share. The Zacks Consensus Estimate for fiscal 2019 has also moved up 4.4% over the same timeframe to $7.63.
Positive Earnings Surprise History: Air Products has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of 2.6%.
Strong Balance Sheet: Air Products ended the fiscal fourth quarter with cash and cash equivalents of $3,273.6 million, a 153% year-over-year surge. Total long-term debt fell around 13% year over year to $3,402.4 million. The company remains committed to invest in its core industrial gases business leveraging its strong balance sheet to create significant value for its shareholders.
Growth Drivers: Air Products has a long-term (three-five years) expected earnings per share growth rate of roughly 12.1%, higher than the industry average of 10%. Air Products is well placed to leverage the cyclical recovery in core industrial end-markets. Moreover, strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018.
The company has also built a strong project backlog. These projects are expected to be accretive to earnings and cash flow over the next few years.
Air Products, in July, inked a long-term gas supply agreement with Huntsman Corporation (HUN - Free Report) . Under the deal, Air Products will build, own and operate a new steam methane reformer and cold box in Geismar, LA. Air Products facilities which will supply hydrogen, carbon monoxide and steam to Huntsman's Geismar operations are expected to be onstream in Jan 2020. The new state-of-the-art facility will provide high reliability and sustainability with enhanced energy efficiency and will help to lower emissions.
Air Products is also expanding in China. The company recently landed a second long-term oxygen and nitrogen supply contract with a leading global materials supplier in Guangdong in South China. The move will help to strengthen Air Products' position in the strategic industrial base as well as its relationship with this global customer. Air Products and Yankuang Group also recently entered into an agreement for a $3.5 billion coal-to-syngas production facility to be constructed in Yulin City, Shaanxi Province, China.
Air Products also remains on track in delivering on its cost reduction programs, which should support its margins. The company is making a good progress with its $600 million cost-cutting program and has already delivered more than $475 million of cost savings and plans to deliver the balance in next two-three years.
Moreover, Air Products has significant amount of cash to invest in its core industrial gases business. The company expects to have at least $8 billion to deploy in strategic, high-return opportunities (including acquisitions and large industrial gases projects) to create shareholders value over the next three years.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote
Other Stocks to Consider
Other top-ranked companies in the basic materials space include Ingevity Corporation (NGVT - Free Report) and Kraton Corporation , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ingevity has an expected long-term earnings growth of 12%. The stock has gained around 43% year to date.
Kraton has an expected earnings growth of 25.4% for the current year. Its shares are up roughly 69% year to date.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>