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Air Products to Gain From Project Investments, Cost Cuts

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We issued an updated research report on Air Products and Chemicals, Inc. (APD - Free Report) on Dec 28.
 
Air Products has also built a strong project backlog. These projects are expected to be accretive to earnings and cash flow over the next few years. Moreover, strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018. 
 
Air Products 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.
 
Air Products is expanding its footprint in China. The company has 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 entered into an agreement for a $3.5 billion coal-to-syngas production facility to be constructed in Yulin City, Shaanxi Province, China.
 
Moreover, Air Products, in July 2017, inked a long-term gas supply agreement with Huntsman. 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 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 has outperformed the industry it belongs to over the past three months. The company’s shares have moved up 8.2% over this period, compared with roughly 4.2% gain recorded by its industry.
 
 

Zacks Rank & Stocks to Consider

Air Products carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Kronos Worldwide Inc. (KRO - Free Report) , Koppers Holding Inc. (KOP - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kronos Worldwide has expected long-term earnings growth of 5%. Its shares have skyrocketed 121.1% year to date.

Koppers has expected long-term earnings growth of 18%. Shares of the company have rallied 26.1% year to date.

Westlake Chemical has expected long-term earnings growth of 10.6%. Its shares have soared 30.7% year to date.

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