New Distributors to PX's Portfolio

The leading industrial gas supplier, Praxair Inc’s (PX - Analyst Report) subsidiary, Praxair Distribution Inc. continues with its pursuit of adding valuable industrial gas distributors to its portfolio.

The company’s latest addition is Texas-based Welders Industrial Supply, LLC, an independent distributor of industrial and specialty gases, welding equipment, supplies and related services. Founded in 2009, Welders Industrial Supply currently employs 10 people and generates roughly $4 million in annual revenue. Welders Industrial Supply’s prime target is its customers in  Houston,  the Texas area.

Of late, in December 2011, Praxair Distribution acquired Houston-based, Texas Welders Supply Company (TWSCO), an independent gas and welding products distributor. Looking back, in October 2011, Praxair Distribution bought Texas-based, National Alloy and Equipment, Inc, one of the leading independent distributors of industrial and specialty gases and ancillary welding equipment, supplies and services in Houston.

These acquisitions will smooth out Praxair’s access to the Houston area, considered to be one of the top five welding markets in the US.

With its promising long-term prospects, Praxair covers increasing application areas for industrial gases. Extensive use of these gases is found in chemical processing, petroleum refining, metal production, fabricating, electronics and health care industries. By 2015, the company’s objective is to achieve annual organic sales growth of 8%-12%; operating profit growth of 10%-15%, and earnings growth of 12%-18%.

The current Zacks Consensus Estimate for the fourth quarter is $1.37, representing a year-over-year increase of 9.31%. Estimates for the fiscal years 2011 and 2012 are $5.44 and $5.93, reflecting annual growth of 14.74% and 9.04%, respectively.

We currently maintain a Neutral recommendation on Praxair.

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