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Air Products and Chemicals (APD) Up 1.8% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Air Products and Chemicals (APD - Free Report) . Shares have added about 1.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Air Products and Chemicals due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Air Products’ Q4 Earnings Meet, Sales Lag Estimates

Air Products reported fourth-quarter fiscal 2018 (ended Sep 30, 2018) adjusted earnings of $2.00 per share, up 14% from the year-ago quarter. The bottom line also matched the Zacks Consensus Estimate.

Net income (attributable to Air Products) for the fiscal fourth quarter was down around 3.4% year over year to $452.9 million or $2.05 per share.

The company reported fiscal fourth-quarter revenues of $2,298.9 million, up around 4.4% year over year, driven by 3% higher volumes, 1% favorable energy pass-through and 1% higher pricing, partly offset by 1% unfavorable currency. However, sales missed the Zacks Consensus Estimate of $2,308 million.

FY18 Results
 
The company reported net income from continuing operations of $1.5 billion or $6.59 per share for fiscal 2018, up 28.3% year over year. For fiscal 2018, adjusted earnings came in at $7.45 per share, up 18% from the previous year.
 
Sales rose 9% year over year to $8.9 billion for fiscal 2018 on higher volumes, higher pricing and favorable currency.

Segment Highlights

Revenues from the Industrial Gases — America segment went up 4% year over year to $987 million in the reported quarter, supported by higher volumes and pricing, partly offset by unfavorable currency. Hydrogen demand remained strong while merchant gases volumes were positive.

Sales from the Industrial Gases — Europe, Middle East, and Africa (EMEA) segment climbed 8% year over year to $555 million driven by favorable energy pass-through, positive volumes and pricing, partly negated by unfavorable currency.

Sales from the Industrial Gases — Asia segment increased 15% year over year to $633 million on the back of strong volumes and higher pricing.

Financial Position

Air Products ended fiscal 2018 with cash and cash equivalents of $2,791.3 million, reflecting a year-over-year decrease of 14.7%. Long-term debt was down by 12.7% year over year to $2,967.4 million.

Outlook
        
Air Products anticipates adjusted earnings for fiscal 2019 to be in the range of $8.05 to $8.30 per share, reflecting a 10% increase at the midpoint year over year. The company expects adjusted earnings to be in the band of $1.85 to $1.90 per share for first-quarter fiscal 2019, up 5% at the midpoint year over year. The company also anticipates capital expenditure of $2.3-$2.5 billion for fiscal 2019.
 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Air Products and Chemicals has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Air Products and Chemicals has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.




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