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Bull of the Day: Air Products (APD)

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Air Products (APD - Free Report) , a Zacks Rank #2 (Buy), is a world-leading Industrial Gases company. The Company's core industrial gases business provides atmospheric and process gases and related equipment to manufacturing markets, including refining and petrochemical, metals, electronics, and food and beverage. Air Products is also the world's leading supplier of liquefied natural gas process technology and equipment. The Company is the world's largest supplier of hydrogen and has built leading positions in growth markets such as helium and natural gas liquefaction.

Earnings Data

Air Products recently reported earnings results where they easily beat both the Zacks consensus earnings and revenue estimates.  The report showed that revenues improved by +17.7%, volumes were up +13%, and pricing increased by +2%.  All three gas segments saw increases in total volume.

On a segment basis, sales improved in each segment; Americas +5% due to higher volumes, and strong hydrogen demand.  EMEA +29%, with volumes rising by +17%, mostly due to its new hydrogen plant in India.  Asia +47% due to new plants, strong merchant business, and increased pricing.  

Air Products also has the best balance sheet in the industry which has enabled them to make several recent key acquisitions in China, India, and Korea.  

Management Increases Guidance

Due to the strong earnings report, and high expectations for 2018, management issued upside guidance for Q2 18, and increased FY EPS guidance as well.  Now APD expects Q2 18 EPS in a range of $1.65-1.70 per share, just above the Zacks consensus estimate of $1.67.  For FY 18, management expects EPS to be in a range of $7.15-7.35 per share, well above the previous Zacks consensus estimate of $7.00.  

Management’s Take

According to Seifi Ghasemi, Chairman, President, and CEO, “The committed and motivated team at Air Products delivered another excellent quarter of safety and financial results. Adjusted EPS of $1.79 was another quarterly record. This is also the 15th consecutive quarter that we have reported adjusted EPS growth. In addition, we are winning new projects and delivering on our growth strategy. We generated a significant amount of investable cash and announced a 16 percent increase to our quarterly dividend, making our annual dividend $4.40 per share.”

Price and Earnings Consensus Chart

As you can see in the chart below, the stock price has been on an upward trend for most of 2017, and into 2018.

Air Products and Chemicals, Inc. Price and Consensus

Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote

Increasing Earnings Estimates

Due to the strong quarter, improving volumes, and strategic acquisitions, analysts have increased earnings estimates for Q2 18, Q3 18, FY 18 and FY 19 over the past 30 days.  Q2 18 was lifted from $1.67 to $1.68, Q3 18 rose from $1.80 to $1.87, FY 18 increased from $7.03 to $7.32, and FY 19 improved from $7.69 to $7.99.

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