Praxair Inc. (PX Quick QuotePX - Free Report) is scheduled to report second-quarter 2018 results on Jul 26, before the opening bell.

 

The industrial gas producer and supplier performed well in the last four quarters. Average earnings surprise was a positive 3.69%. Notably, in the last reported quarter, the company’s earnings of $1.65 per share surpassed the Zacks Consensus Estimate by 5.77%.

 

 

In the last year, the company’s shares have yielded 19.7% return, outperforming the 3.6% rise recorded by the industry.

 

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

 

 

We believe that Praxair’s growth opportunities are directly correlated with industrial activities in the United States and that of the foreign nations it serves. Available data for few economic indicators clearly reflect that operating conditions were quite favorable for industrial companies in the second quarter of 2018. Overall, for the second quarter, industrial production improved at an annual rate of 6% — marking its third consecutive quarterly increase. Growing U.S. housing markets, along with expanding domestic and world economy, support growth of industrial stocks.

 

 

For the second quarter of 2018, the company anticipates earnings to be within the $1.67-$1.72 per share range. The projection reflects year-over-year growth of 14-18% and includes 5 cents of gain from the recent tax reform in the country. The Zacks Consensus Estimate for earnings for the second quarter is currently pegged at $1.70, up 16% year over year.  Revenues for the quarter are pegged at $3 billion, up 6.7% year over year. 

 

For the North America segment, Praxair will gain from rising demand for gases for industrial use, especially in the metals, chemicals, downstream energy and manufacturing end markets. The Zacks Consensus Estimate for the North America segment’s revenues is pegged at $1,603 million for the segment.

 

For South America, a lot depends on the political uncertainties in Brazil that have somewhat stalled growth prospects in the region. The Zacks Consensus Estimate for the South America segment’s revenues is at $366 million for the to-be-reported quarter.

 

For the Asia segment, growth in demand for gases for the use in electronics end market, especially by Chinese and Korean customers, is believed to be a boon. The Zacks Consensus Estimate for the segment’s revenues is pegged at $489 million in the second quarter. For the Europe segment, manufacturing and metals industries are demanding more industrial gases. Per the Zacks model, the segment is expected to log sales of $426 million in the second quarter.

 

However, higher interest due to higher debt levels and rising costs will impair Praxair’s margins.

 

 

Our proven model provides some idea on the stocks that are about to release earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for an earnings beat to be likely. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

That is not the case for Praxair as you will see below.

 

Zacks ESP: Earnings ESP for the company is currently +0.06%.

 

Zacks Rank: Praxair has a Zacks Rank #5 (Strong Sell), which reduces the predictive power of ESP. Notably, we caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

 

 

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

 

KapStone Paper and Packaging Corporation has an Earnings ESP of +2.27% and a Zacks Rank #1. Its shares have surged 55% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Orion Engineered Carbons S.A (OEC Quick QuoteOEC - Free Report) has an Earnings ESP of +3.85% and a Zacks Rank #1. Shares of the company have gained 39% in the past year.

 

Nucor Corporation (NUE Quick QuoteNUE - Free Report) has an Earnings ESP of +4.27% and a Zacks Rank #2. Shares of the company have gained 10% in the past year.

 

 

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