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Air Products' (APD) Shares Up 20% in 3 Months: Here's Why

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Shares of Air Products and Chemicals, Inc. (APD - Free Report) have shot up around 20% over the past three months. The company has also significantly outperformed its industry’s decline of roughly 9% over the same time frame.

Air Products, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $42.1 billion and average volume of shares traded in the last three months was around 1,186.6K. The company has an expected long-term earnings per share growth rate of 13%, above the industry average of 12%.


 

Let’s take a look into the factors that are driving this industrial gases giant.

What's Working in APD’s Favor?

Upbeat outlook and healthy growth prospects have contributed to the gains in Air Products’ shares. The company is poised for growth in fiscal 2019 on the back of its project investments, new business deals and acquisitions.

Air Products continues to expect adjusted earnings per share for fiscal 2019 in the range of $8.05-$8.30, reflecting a 10% increase at the midpoint year over year. Also, the company expects adjusted earnings in the range of $1.80-$1.90 per share for second-quarter fiscal 2019, up 8% at the midpoint year over year.

The Zacks Consensus Estimate for earnings for fiscal 2019 for Air Products is currently pegged at $8.18 per share, reflecting an expected year-over-year growth of 9.8%. Moreover, earnings are expected to register a 13.9% growth in fiscal 2020.

Air Products’ strategic investments in high-return projects, productivity actions and contributions of acquisitions should drive its fiscal 2019 results. The Lu'An syngas project in China, which is now fully onstream, contributed to the results in the company’s Industrial Gases – Asia segment in the fiscal first quarter. The company expects the Lu'An project to contribute more than 25 cents per share to its earnings in fiscal 2019.

Moreover, in February 2019, the company announced that it has successfully achieved the mechanical completion of the world’s largest industrial gas complex in Jazan, Saudi Arabia. The industrial gas complex is expected to be onstream in phases in 2019. This is one of the biggest projects executed by Air Products.

Air Products has a total available capacity to deploy (over fiscal 2018-2022) roughly $16 billion in high-return investments, aimed at creating significant shareholder value. The company has already spent or committed more than half of this capacity.

Last month, the company also completed the buyout of ACP Europe SA, which is the largest independent carbon dioxide business in Continental Europe. The buyout enables the company to serve existing customers better and tap new industrial gas growth opportunities. Customers will gain from a broader liquid carbon dioxide supply position across additional regions of Europe as well as greater density throughout Continental Europe. Air Products noted that the acquisition provides it a strong platform to pursue further industrial gas growth in Europe and deliver value to customers.

Air Products also remains committed to boost productivity to improve its cost structure. The company is seeing positive impact of its productivity actions and expects to benefit from additional productivity and cost improvement programs in fiscal 2019.

Moreover, Air Products remains committed to maximize returns to shareholders leveraging strong cash flows. The company, earlier this year, raised its quarterly dividend by more than 5% to $1.16 per share, marking the 37th straight year of dividend hike. The company plans to return more than $1 billion in dividends in 2019.

Stocks Worth a Look

Stocks worth considering in the basic materials space include Ingevity Corporation (NGVT - Free Report) , W. R. Grace & Co. and Israel Chemicals Ltd. (ICL - Free Report) .

Ingevity has an expected earnings growth rate of 17.9% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have surged roughly 51% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

W. R. Grace has an expected earnings growth rate of 10.4% for the current year and carries a Zacks Rank #2 (Buy). Its shares have rallied around 27% in the past year.

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2. The company’s shares have gained around 25% over the past year.  

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

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