Air Products and Chemicals Inc. (APD - Free Report) has announced that it will raise product prices and surcharges of liquid and bulk industrial gas products for the North American merchant customers.
The move is in response to the cost impact associated with increasing operational and delivery costs related to certain regional demand and supply imbalances and continued low operating rates in the steel market. The price will be effective Jul 1, 2018 or as contracts permit.
Per the company, pricing adjustments for liquid and bulk helium include a hike up to 20%, for liquid argon and microbulk the hike is up to 15% and for liquid and bulk hydrogen it is up to 10%. Based on particular situations, some price adjustments may also be outside these ranges.
Notably, the company is making significant investments for improving the reliability, safety, security and cost efficiency of its operations in addition to covering increases in operating expenses.
The stock has moved up 1.5% in the past three months, slightly underperforming the industry’s 2.2% rise.
In April, Air Products raised its fiscal 2018 earnings outlook, taking expected contributions from the Lu'An syngas project into account. The company now expects adjusted earnings in the range of $7.25-$7.40 per share (a 15-17% increase from the prior year), up from its earlier view of $7.15-$7.35.
Also, the company expects adjusted earnings in the range of $1.80-$1.85 per share for the fiscal third quarter, up 9-12% year over year.
The company has built a strong project backlog. These projects are expected to be accretive to earnings and cash flow, as they come on stream over the next few years. It will also benefit from its actions to cut operational costs. Moreover, strategic investments in high-return projects, new business deals and acquisitions are likely to drive fiscal 2018 results.
Zacks Rank & Stocks to Consider
Air Products currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the basic materials space are The Chemours Company (CC - Free Report) , FMC Corporation (FMC - Free Report) and Westlake Chemical Corporation (WLK - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Chemours has an expected long-term earnings growth rate of 15.5%. Its shares have gained 35.2% in a year.
FMC Corp has an expected long-term earnings growth rate of 14.3%. Its shares have moved up 18.5% in a year.
Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have rallied 75% in a year.
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