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Linde (LIN) Surpasses Q3 Earnings Estimates, Ups EPS View

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Linde plc (LIN - Free Report) has reported adjusted earnings from continuing operations of $1.94 per share in third-quarter 2019, beating the Zacks Consensus Estimate of $1.78. Moreover, the bottom line increased from the year-ago figure of $1.54 per share.

The company’s revenues of $7,000 million improved from the year-ago level of $3,008 million but missed the Zacks Consensus Estimate of $7,140 million.

The strong quarterly earnings of the leading producer and distributer of industrial gases were supported by improved prices across all the business segments.

Linde plc. Price, Consensus and EPS Surprise

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Linde plc. price-consensus-eps-surprise-chart | Linde plc. Quote

Segmental Results

The company operates through four business segments — Americas, APAC (the Asia Pacific), EMEA (Europe, Middle East & Africa) and Engineering.

Pro forma sales from the Americas unit in the September-end quarter of 2019 were $2,771 million, up from $2,627 million in the year-ago comparable period. Moreover, the segment contributed $671 million of pro forma operating profit, mirroring an improvement from $622 million in third-quarter 2018. Higher prices primarily contributed to the outperformance.

From the APAC unit, the company generated sales of $1,461 million, down from the year-ago quarter’s $1,539 million. The sales decline resulted from lower volume, following weaker economy. However, the segment contributed $308 million to operating profit in third-quarter 2019, up from $256 million in the prior-year period, owing to higher prices.

Sales from the EMEA unit decreased to $1,634 million from $1,695 million in the September-end quarter of 2018. However, the company generated operating profit of $335 million from the segment, higher than $308 million in the prior-year quarter. The results were aided by higher prices, partially offset by lower volume, owing to a slowdown in manufacturing activities.

The company’s pro forma sales from the Engineering business were $641 million, up from $635 million in the prior-year quarter. The segment’s profit also increased to $120 million from $69 million in third-quarter 2018, owing to contributions from timely project executions and completions.

Balance Sheet

As of Sep 30, 2019, Linde had cash and cash equivalents of $2,120 million. Long-term debt totaled $10,567 million. Its debt-to-capitalization ratio is 20.5%.

Guidance

The company expects adjusted earnings per share (EPS) of $7.25-$7.30 for 2019, suggesting a year-over-year improvement of 17-18%. This is the third time that Linde has revised its 2019 EPS estimates higher.

Zacks Rank & Other Stocks to Consider

Linde currently carries a Zacks Rank #2 (Buy). Some other top-ranked players in the basic material space are Verso Corp. (VRS - Free Report) , Kirkland Lake Gold Ltd. (KL - Free Report) and Yamana Gold Inc. (AUY - Free Report) . All the stocks currently sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Verso beat the Zacks Consensus Estimate in three of the prior four quarters, the average positive earnings surprise being 73.5%.

Kirkland is likely to see bottom-line growth of 96.3% in 2019.

Yamana has witnessed upward revisions in its 2019 earnings estimates over the past 30 days.

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