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Praxair Hikes Gas prices to Cover Increased Costs

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Praxair Inc. (PX - Free Report) , an industrial gas producer and supplier, announced price hikes for industrial, specialty and medical gases for its customers in the U.S., Canada, and Puerto Rico.

Prices of nitrogen, oxygen, hydrogen, helium and carbon dioxide have been revised up to 15%. Facility fees or monthly bulk product charges and cylinder rental rates have gone up by 10% while prices for hardgoods have also risen by 10%.

Praxair cited higher cost of production and distribution, feedstock sourcing and other operational factors as the primary reasons behind this revision. The revised rates will be applicable to bulk and packaged gas customers, effective Jul 15, 2014.

Earlier, in Apr 2014, price of argon was increased up to 20% while argon facility fees or monthly bulk product charges went up by 15%. These revised rates were applicable for Praxair’s bulk and packaged industrial, and specialty customers in the U.S. and Puerto Rico.  

We believe Praxair’s profitability is highly dependent on costs of sales and expenses as any unwarranted increase in these will lower profitability and vice versa. In the past five years, the company’s cost of sales has increased by 34%.

Praxair is slated to report its second-quarter results on Jul 23, 2014 before the market opens. The Zacks Consensus Estimate is pegged at $1.59 for the quarter, and at $6.45 for 2014 and $7.20 for 2015. These estimates represent year-over-year growth of 6.4% for the second quarter, 8.8% for 2014 and 11.7% for 2015. Earnings in the next five years are anticipated to grow 11.7%.

Praxair presently has a $38.9 billion market capitalization and carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Celanese Corporation (CE - Free Report) , Koninklijke DSM N.V. (RDSMY - Free Report) and PPG Industries Inc. (PPG - Free Report) . All these stocks hold a Zacks Rank #2 (Buy).

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