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Praxair (PX) to Report Q2 Earnings: What's in the Cards?

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Industrial gas producer and supplier Praxair Inc. (PX - Free Report) is scheduled to report second-quarter 2017 results on Jul 27, before the market opens.

The company’s financial performance in the last four quarters was impressive, with better-than-expected results in three and in-line results in one. Average earnings surprise was a positive 1.67%. Notably, in the last quarter, the company’s earnings of $1.37 per share topped the Zacks Consensus Estimate by 3.01%.

We believe that sound financial performance and growth prospects have lifted investor sentiments for the company. In the last three months, the company’s shares have yielded 8.08% return, outperforming the gain of 3.05% recorded by the industry.

Let us see how things are shaping up for Praxair prior to this earnings announcement.

What’s Influencing Q2 Results?

We believe that Praxair is likely to leverage benefits from better operating conditions in the machinery industry in the to-be-reported quarter. Rise in demand for industrial machineries is likely to boost the need for industrial gases required in the various stages of manufacturing processes. In the second quarter, industrial production (a measure of the level of output of manufacturing, mining and utilities sectors in a country) increased 4.7% from the year-ago quarter, driven by impressive growth in mining and utilities. Also, new orders for U.S.-manufactured machinery improved 4.6% in the first five months of 2017.

Also, encouraging foreign trade relations, investments for infrastructural developments and rise in consumer-end demand is expected to boost growth of machinery companies and hence, industrial gas providers like Praxair. In addition, the company’s contract wins and existing product portfolio as well as new products launched during the quarter, including a new beverage carbonation solution for restaurants and bars – XatCO2 – is likely to positively influence results.  

For the second quarter, Praxair expects earnings in the range of $1.38–$1.43 per share. We believe that such tailwinds might support the company’s results in the quarter. On the flip side, exposure to headwinds like higher production costs, stiff competition, high-debt levels and forex issues might negatively impact Praxair’s growth momentum in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Praxair will be able to pull an earnings surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as you will see below.

Zacks ESP: Earnings ESP is currently 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.42.

Praxair, Inc. Price and EPS Surprise

 

Praxair, Inc. Price and EPS Surprise | Praxair, Inc. Quote

Zacks Rank: Praxair has a Zacks Rank #3 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into earnings announcement, especially when the company is seeing a negative estimate revisions momentum.

Stocks to Consider

Here are some companies you may want to consider in the industry as our model shows they have the right combination of elements to post an earnings beat this quarter:

Westlake Chemical Corporation (WLK - Free Report) , with an Earnings ESP of +5.04% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Chemours Company (CC - Free Report) , with an Earnings ESP of +4.44% and a Zacks Rank #1.

Olin Corporation (OLN - Free Report) , with an Earnings ESP of +56.25% and a Zacks Rank #3.

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