Industrial gas producer and supplier, Praxair Inc. (PX - Free Report) recently announced that it has started operating a new air separation plant at Samsung Electronics Co., Ltd’s Hwasung site in the Gyeonggi Province, South Korea. Also, the company communicated about the upgrade of the pipeline system serving Samsung.
Over the last one year, shares of Praxair yielded a return of 18.4%, outperforming the return of 17.8% provided by the S&P 500 market. We believe expansionary initiatives will help Praxair meet the growing preference of customers for its world-class products and services. Also, increasing application of industrial gases in manufacturing, transportation, healthcare, food & beverages, and metal fabrication industries will prove to be a boon for industrial gas producers.
Despite the long-term positives, we believe that Praxair’s exposure to certain near-term headwinds, including unfavorable foreign currency movements, higher production costs, stiff competition, and high debt levels have restricted its growth momentum. Over the last one year, shares of Praxair have underperformed the return of 26.6% provided by the Zacks categorized Chemicals diversified industry.
Praxair’s New and Existing Business with Samsung
As revealed, the plant is Praxair’s fourth of its kind at the Hwasung site and will supply nitrogen to Samsung. The new plant has a daily production capacity of 1,400 tons of industrial gases. We believe the move further solidifies the two companies’ business relations as well as strengthens Praxair’s foothold in the region.
Praxair’s existing business with Samsung includes supply of nitrogen, oxygen, argon, helium and other gases through its complex outside Seoul. In addition, the company satisfies the need for liquid oxygen, nitrogen and argon to local customers in non-ferrous metal, wastewater treatment and ship building end markets.
Zacks Rank & Stocks to Consider
With a market capitalization of $33.3 billion, Praxair Inc. currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for the stock is $5.88 per share for 2017, representing 7.3% year-over-year growth.
Some better-ranked stocks in the chemical industry include The Chemours Company (CC - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and Albemarle Corporation (ALB - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Chemours Company has a positive average earnings surprise of 153.83% for the last four quarters. Also, earnings expectations for 2017 have improved over the past 60 days.
Kronos Worldwide, Inc.’s financial performance has been impressive in the last quarter, with a positive earnings surprise of 111.11%. Also, the stock’s earnings estimates for 2017 have been revised upward over the last 60 days.
Albemarle Corporation has witnessed positive revisions in earnings estimates for 2017, over the past 60 days. Also, the company has an average positive earnings surprise of 27.13%.
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