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Air Products' Shares Rally 25% YTD: What's Driving the Upside?
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Key Takeaways
Air Products gained 24.7% YTD as investments, deals, acquisitions and productivity initiatives aided growth.
APD's $3 billion project backlog and cost actions are supporting earnings, cash flow and margins.
Air Products topped Q3 earnings estimates and raised fiscal 2026 adjusted EPS guidance to $13.39-$13.49.
Air Products and Chemicals, Inc.’s (APD - Free Report) shares have gained 24.7% so far this year. The company has also outperformed the Zacks Chemicals Diversified industry’s 21.1% rise over the same time frame. APD is benefiting from investments in high-return projects, new business deals, acquisitions and productivity initiatives.
Let’s take a look into the factors that are driving APD stock.
Image Source: Zacks Investment Research
High-Return Projects & Productivity Actions Aid Air Products
Air Products is gaining from investments in high-return industrial gas projects and productivity initiatives. The company remains committed to its gasification strategy while advancing key growth projects, which are expected to contribute positively to earnings and cash flow.
APD has an industrial gas project backlog of around $3 billion, with most projects focused on serving electronics customers. It also plans to invest around $1.5 billion annually in traditional industrial gas projects.
Air Products is currently pursuing the NEOM green hydrogen project in Saudi Arabia. The project is expected to supply up to 1.2 million tons per year of renewable ammonia. Air Products and Yara International have finalized a marketing and distribution agreement for renewable ammonia from the project. Under the deal, Yara will transport and market green ammonia not sold by Air Products as renewable hydrogen.
Air Products is also driving productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead. The company also remains focused on improving pricing amid an inflationary environment. Air Products is also taking action to right-size the organization through headcount reductions and expects these reductions to result in $250 million in annual cost savings once completed. It has already realized roughly $75 million in savings from headcount reductions, as divulged in its fiscal third-quarter earnings call.
APD delivered forecast-topping earnings performance in the fiscal third quarter. Adjusted earnings of $3.47 per share rose from $3.09 a year ago and topped the Zacks Consensus Estimate of $3.36. Higher on-site volumes, favorable currency, new assets, pricing and productivity supported results.
Air Products raised its fiscal 2026 adjusted earnings guidance to $13.39-$13.49 per share from the prior range of $13.00-$13.25. For the fourth quarter of fiscal 2026, Air Products expects adjusted earnings of $3.55-$3.65 per share, implying 5-8% growth from the prior-year period. The growth is expected to be supported by new asset contributions, pricing actions and productivity initiatives.
Air Products and Chemicals, Inc. Price and Consensus
The Zacks Consensus Estimate for WS’s current-year earnings stands at $3.4 per share, implying a 52.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the negative average surprise being 13.8%.
The Zacks Consensus Estimate for CRS’s current fiscal-year earnings is pegged at $13.08 per share, implying a 21.6% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, with the average surprise being 8.4%.
The Zacks Consensus Estimate for AVNT’s current-year earnings is pegged at $3.2 per share, indicating a 13.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, with the average surprise being 3.4%.
View the Zacks #1 Rank List
Image: Bigstock
Air Products' Shares Rally 25% YTD: What's Driving the Upside?
Key Takeaways
Air Products and Chemicals, Inc.’s (APD - Free Report) shares have gained 24.7% so far this year. The company has also outperformed the Zacks Chemicals Diversified industry’s 21.1% rise over the same time frame. APD is benefiting from investments in high-return projects, new business deals, acquisitions and productivity initiatives.
Let’s take a look into the factors that are driving APD stock.
Image Source: Zacks Investment Research
High-Return Projects & Productivity Actions Aid Air Products
Air Products is gaining from investments in high-return industrial gas projects and productivity initiatives. The company remains committed to its gasification strategy while advancing key growth projects, which are expected to contribute positively to earnings and cash flow.
APD has an industrial gas project backlog of around $3 billion, with most projects focused on serving electronics customers. It also plans to invest around $1.5 billion annually in traditional industrial gas projects.
Air Products is currently pursuing the NEOM green hydrogen project in Saudi Arabia. The project is expected to supply up to 1.2 million tons per year of renewable ammonia. Air Products and Yara International have finalized a marketing and distribution agreement for renewable ammonia from the project. Under the deal, Yara will transport and market green ammonia not sold by Air Products as renewable hydrogen.
Air Products is also driving productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead. The company also remains focused on improving pricing amid an inflationary environment. Air Products is also taking action to right-size the organization through headcount reductions and expects these reductions to result in $250 million in annual cost savings once completed. It has already realized roughly $75 million in savings from headcount reductions, as divulged in its fiscal third-quarter earnings call.
APD delivered forecast-topping earnings performance in the fiscal third quarter. Adjusted earnings of $3.47 per share rose from $3.09 a year ago and topped the Zacks Consensus Estimate of $3.36. Higher on-site volumes, favorable currency, new assets, pricing and productivity supported results.
Air Products raised its fiscal 2026 adjusted earnings guidance to $13.39-$13.49 per share from the prior range of $13.00-$13.25. For the fourth quarter of fiscal 2026, Air Products expects adjusted earnings of $3.55-$3.65 per share, implying 5-8% growth from the prior-year period. The growth is expected to be supported by new asset contributions, pricing actions and productivity initiatives.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote
APD’s Zacks Rank & Key Picks
APD currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space are Worthington Steel, Inc. (WS - Free Report) , Carpenter Technology Corporation (CRS - Free Report) and Avient Corporation (AVNT - Free Report) . WS currently carries a Zacks Rank #1 (Strong Buy), while CRS and AVNT carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WS’s current-year earnings stands at $3.4 per share, implying a 52.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters and missed twice, with the negative average surprise being 13.8%.
The Zacks Consensus Estimate for CRS’s current fiscal-year earnings is pegged at $13.08 per share, implying a 21.6% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, with the average surprise being 8.4%.
The Zacks Consensus Estimate for AVNT’s current-year earnings is pegged at $3.2 per share, indicating a 13.5% year-over-year increase. Its earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, with the average surprise being 3.4%.