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Air Products and Chemicals (APD) Down 3.9% Since Last Earnings Report: Can It Rebound?

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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 3.9% 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 Q3, Sales Beat

Air Products logged earnings from continuing operations of $2.36 per share in third-quarter fiscal 2021 (ended Jun 30, 2021), up 17% from $2.01 recorded in the year-ago quarter.

Adjusted earnings per share (EPS) in the reported quarter were $2.31, which missed the Zacks Consensus Estimate of $2.39.

In the quarter under review, the company delivered revenues of $2,604.7 million, up around 26% year over year. The figure beat the Zacks Consensus Estimate of $2,562.8 million.

Pricing increased 2% along with 6% favorable currency and 6% higher energy pass-through. Volumes were higher as recovery from the pandemic, new plants and acquisitions more than offset reduced contributions from the Lu'An facility in China.

Segment Highlights

Revenues in the Industrial Gases - America segment were up 25% year over year to $1,063 million. The upside was driven by merchant pandemic recovery, higher pricing, higher energy cost pass-through, higher volumes, higher medical oxygen sales in South America and favorable currency.

Revenues in the Industrial Gases - EMEA segment surged 45% year over year to $623 million. Higher volumes led by pandemic recovery and acquisitions as well as favorable currency drove results in the segment. The segment also witnessed higher pricing and energy pass-through.
 
Revenues in the Industrial Gases - Asia segment rose 15% year over year to $752 million. The upside can be attributed to favorable currency, higher volumes and higher pricing. Increased merchant volumes and new plants were partly offset by reduced contributions from Lu'An.

Financials

Air Products ended fiscal third quarter with cash and cash equivalents of around $4,291.6 million, up 9.4% year over year. Long-term debt was down 2.6% year over year to $6,892.2 million.

Outlook

Air Products expects adjusted EPS of $8.95-$9.05 for fiscal 2021 and $2.44-$2.54 for the fourth 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 a downward trend in estimates review.

VGM Scores

At this time, Air Products and Chemicals has an average Growth Score of C, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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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