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Why Is Air Products and Chemicals (APD) Down 0.4% Since Last Earnings Report?

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It has been about a month since the last earnings report for Air Products and Chemicals (APD - Free Report) . Shares have lost about 0.4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Air Products and Chemicals due for a breakout? 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 drivers.

Air Products' Earnings Lag Estimates in Q2, Sales Beat

Air Products logged earnings from continuing operations of $2.13 per share in second-quarter fiscal 2021 (ended Mar 31, 2021), down 4% from $2.21 recorded in the year-ago quarter. The bottom line was hurt by the impact of the coronavirus outbreak.

Adjusted earnings per share (EPS) in the reported quarter were $2.08, which missed the Zacks Consensus Estimate of $2.13.

In the quarter under review, the company delivered revenues of $2,502 billion, up around 12.9% year over year. The figure beat the Zacks Consensus Estimate of $2,358.9 million.

Pricing increased 2% along with 4% favorable currency and 7% higher energy pass-through. Volumes were flat year over year due to reduced merchant demand, impacts of the winter storm Uri and lower contribution from the Lu'An gasification project in Asia.

Segment Highlights

Revenues in the Industrial Gases - America segment were up 13% year over year to $1,056 million due to higher pricing, higher energy cost pass-through and favorable currency.

Revenues in the Industrial Gases - EMEA segment increased 19% year over year to $585 million. Increased volumes driven by acquisitions and higher onsite volumes were partly offset by lower demand. The segment also witnessed higher pricing and energy pass-through.

Revenues in the Industrial Gases - Asia segment increased 6% year over year to $698 million. The upside can be attributed to favorable currency and higher pricing, partly offset by lower volumes.

Financials

Air Products ended fiscal second quarter with cash and cash equivalents of around $5.79 billion, up 160.6% year over year. Long-term debt was up 109.7% year over year to $6,804.6 million.

Outlook

Air Products expects EPS of $8.95-$9.10 for fiscal 2021 and $2.30-$2.40 for the third quarter of fiscal 2021. The company expects capital spending of roughly $2.5 billion for the fiscal, excluding the Jazan transaction.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Air Products and Chemicals has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Air Products and Chemicals has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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