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Why Is Air Products and Chemicals (APD) Up 1.3% Since Last Earnings Report?

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A month has gone by since the last earnings report for Air Products and Chemicals (APD - Free Report) . Shares have added about 1.3% in that time frame, underperforming the S&P 500.

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

Air Products' Earnings Miss, Sales Top Estimates in Q4

Air Products logged earnings from continuing operations of $2.19 per share in fourth-quarter fiscal 2020 (ended Sep 30, 2020), down 3.5% from $2.27 recorded in the year-ago quarter. The bottom line in the reported quarter was hurt by the impact of the coronavirus pandemic. Earnings per share in the reported quarter also missed the Zacks Consensus Estimate of $2.23.

The company delivered fiscal fourth-quarter revenues of $2,320.1 million, up around 2% year over year. The figure beat the Zacks Consensus Estimate of $2,269 million.

Pricing increased 2%, which along with 1% favorable currency, more than offset 1% lower energy pass-through.

FY20 Results

Adjusted earnings for fiscal 2020 rose 2% year over year to $8.38 per share, while net sales dropped 1% to $8.9 billion.

Segment Highlights

Revenues in the Industrial Gases - America segment fell 3% year over year to $912 million due to lower volume, lower energy pass-through and unfavorable currency, which were partly offset by higher pricing.

Revenues in the Industrial Gases - Europe, Middle East, and Africa (EMEA) segment rose 3% year over year to $505 million. Higher pricing and favorable currency more than offset lower energy pass-through and flat volumes.

Revenues in the Industrial Gases - Asia segment dropped 2% year over year to $714 million. The downside was due to lower volumes.

Financials

Air Products ended fiscal 2020 with cash and cash equivalents of $5.3 billion, up 133.6% year over year. Long-term debt was up 145.3% year over year to $7,132.9 million.

Net cash from operating activities was $3,264.7 million for the 12-months ended Sep 30, 2020, up 9.9% year over year.

Outlook

Air Products’ on-site businesses (representing more than half of its sales) continued to deliver stable cash flow amid a challenging COVID-19 environment. The company announced a landmark gasification and hydrogen for mobility megaprojects, which will help address the increasing energy needs globally. It is also committed to boost shareholders’ value. The company increased its dividend for the 38th consecutive year.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review. The consensus estimate has shifted -7.45% due to these changes.

VGM Scores

At this time, Air Products and Chemicals has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Air Products and Chemicals has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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