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Air Products (APD) to Post Q4 Earnings: What's in the Cards?

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Air Products and Chemicals, Inc. (APD - Free Report) is slated to release fourth-quarter fiscal 2018 results on Nov 6, before the market opens.
The company recorded adjusted earnings per share of $1.95 in the fiscal third quarter, up 18% from a year ago. Earnings had surpassed the Zacks Consensus Estimate of $1.84.

Air Products logged net sales of $2,259 million for the quarter, up 6% year over year. The top line however had missed the consensus mark of $2,291 million.     
Air Products surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being around 4.9%.
The company’s shares have lost 2.4% in a year’s time against the industry’s fall of 22.6%.

Let’s see how things are shaping up for this announcement.

Factors to Consider

Air Products, during its third-quarter call, raised its guidance for fiscal 2018 adjusted earnings. It now anticipates adjusted earnings per share in the range of $7.40 to $7.45 (a 17-18% increase from the prior year), up from its earlier view of $7.25 to $7.40.

Adjusted earnings per share are expected in the band of $1.95 to $2.00 for the fiscal fourth quarter, up 11-14% year over year.

The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $2,308 million, projecting a rise of 4.8% year over year.

Air Products’ strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018. Higher expected volumes and pricing along with the company’s productivity actions are also likely to support margins in the to-be-reported quarter.

The consensus estimate for the Industrial Gases — America segment’s fourth-quarter revenues is pinned at $993 million, reflecting a 4.2% rise from a year ago. Operating income is expected to increase 5.3% year over year as the Zacks Consensus Estimate for the same is pegged at $280 million.

Higher volumes and pricing are driving results in this segment. However, maintenance turnarounds and outages are affecting the segment. Air Products expects a year-over-year hike in maintenance cost in the fiscal fourth quarter.This may impact overall operating costs as well as margins in this unit.

Air Products’ Industrial Gases — Asia segment’s revenues are expected to increase 18.5% from the year-ago quarter as the Zacks Consensus Estimate for the same is pegged at $654 million. For this segment, the Zacks Consensus Estimate for fourth-quarter operating income is at $187 million, reflecting a year-over-year increase of 23%. The company gained from higher volumes and pricing and favorable currency swings in the third quarter.
The Zacks Consensus Estimate for revenues at the Industrial Gases — EMEA segment is projected at $533 million, reflecting an estimated rise of 3.5% year over year. Segment income is likely to decline 2.5% year over year as the Zacks Consensus Estimate stands at $115 million. Volume gains and pricing actions are expected to drive results.
The Industrial Gases — Global segment revenues are expected to decline 32% year over year as the Zacks Consensus Estimate is pegged at $117 million for the same. Segment income is expected to rise 23.4% year over year and the Zacks Consensus Estimate for the same is pinned at $15.3 million.

The company saw lower sales and profits in its Global Gases unit in the third quarter due to lower activity from the Jazan project. It expects this to result in reduced revenues and profits in the global gases business in fiscal 2018. 

Air Products and Chemicals, Inc. Price and EPS Surprise


Earnings Whispers

Our proven model does not show that Air Products is likely to beat the Zacks Consensus Estimate this earnings season. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here as you will see below:

Earnings ESP: Air Products has an Earnings ESP of -0.79%. This is because the Most Accurate Estimate is $1.98 while the Zacks Consensus Estimate is currently pegged at $2.00. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Air Products carries a Zacks Rank #4 (Sell). Note that stocks with a Zacks Rank #4 or 5 (Strong Sell) should never be considered going into an earnings announcement.

Stocks Poised to Beat Estimates

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Sociedad Quimica y Minera de Chile S.A. (SQM - Free Report) has an Earnings ESP of +0.74% and carries Zacks Rank #2.

Nutrien Ltd. (NTR - Free Report) has an Earnings ESP of +10.43% and Zacks Rank #2.

Osisko Gold Royalties Ltd (OR - Free Report) has an Earnings ESP of +19.05% and carries Zacks Rank #3. 

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