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Air Products (APD) Hits New 52-Week High: What's Driving it?

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Shares of Air Products and Chemicals, Inc. APD scaled a fresh 52-week high of $256.59 during the trading session on Feb 18, before retracting a bit to close at $255.74.

The Zacks Rank #3 (Hold) stock has a market cap of $56.4 billion. Average volume of shares traded in the past three months is 1,085K. The company also has expected long-term earnings per share growth rate of 12.9%. It surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, while missed once, delivering a positive surprise of 1.39%, on average.

The company’s shares have rallied 43.9% in the past year against the industry’s 29% decline.

 

 

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

What’s Favoring the Stock?

Strong earnings performance in first-quarter fiscal 2020, buoyant outlook and dividend hike are contributing to the rally in Air Products’ shares. Its fiscal first-quarter earnings from continuing operations climbed 36% on a year-over-year basis to $2.14 per share. It also beat the Zacks Consensus Estimate of $2.08.  The bottom line in the reported quarter was driven by higher volume and pricing across all regions.

On its fiscal first-quarter earnings call, Air Products had expected adjusted earnings of $9.35-$9.60 per share for fiscal 2020, suggesting a 14-17% rise from the year-ago reported figure. The company expects adjusted earnings of $2.1-$2.20 for second-quarter fiscal 2020, indicating a 9-15% rise year over year.

The Zacks Consensus Estimate for earnings of $9.52 for fiscal 2020 suggests year-over-year growth of 16%. Moreover, earnings are expected to register 13% growth in the fiscal second quarter.

Earnings estimates for fiscal 2020 are also going up over the past month. Over this period, the Zacks Consensus Estimate for the fiscal year has moved up 0.5%.

Air Products is benefiting from investments in high-return projects, project wins and productivity actions. New projects contributed to volume growth in the fiscal first quarter.

Notably, the company’s latest project in the United States, which is worth $500 million, showcases its core strengths and capabilities for supplying nitrogen from an air separation unit (ASU) and hydrogen from a steam methane reformer (SMR). This marks Air Products' largest investment so far in the United States. The project will likely boost the size and supply capacity of the company’s extensive hydrogen pipeline system in the Gulf Coast.

The company’s board also increased its quarterly dividend by more than 15% to $1.34 per share from $1.16, marking the largest dividend hike in its history. This also marks the 38th straight year of a dividend increase.

Air Products and Chemicals, Inc. Price and Consensus

 

Stocks to Consider

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Sandstorm Gold Ltd SAND and Commercial Metals Company (CMC - Free Report) .

Daqo New Energy has a projected earnings growth rate of 353.7% for 2020. The company’s shares have rallied 118.5% in a year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandstorm Gold has an estimated earnings growth rate of 66.7% for fiscal 2020. It currently flaunts a Zacks Rank #1. The company’s shares have rallied 29.1% in a year.

Commercial Metals presently has a Zacks Rank #2 (Buy) and a projected earnings growth rate of 20.2% for 2020. The company’s shares have rallied 23.6% in a year.

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