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

Zacks Equity Research
Updated

Shares of Pennsylvania-based industrial gases maker, Air Products & Chemicals Inc. APD, scaled a fresh 52-week high of $153.57 on Oct 4, before pulling back to eventually close the day at $152.90.

Air Products has a market cap of roughly $33.3 billion and average volume of shares traded in the last three months is around 1,402.8K. The company has an expected long-term earnings per share growth rate of around 12.1%.

Shares of Air Products have moved up 7.6% in the last three months, underperforming the industry’s 12% growth.

 

 

Driving Factors

Air Products logged third-quarter fiscal 2017 (ended Jun 30, 2017) adjusted earnings of $1.65 per share, up 15% from the year-ago quarter. The figure surpassed the Zacks Consensus Estimate of $1.60.

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Revenues rose 11% year over year to $2.12 billion in the reported quarter, beating the Zacks Consensus Estimate of $2.05 billion. An 8% increase in volumes and 5% favorable energy pass-through more than offset the currency headwinds of 2% during the quarter.

Air Products, in August, increasedits adjusted earnings per share guidance for the full year. The company now expects adjusted earnings per share of $6.20-$6.25 (up from $6.00-$6.25 expected earlier), which at midpoint, represents a 10% increase over last year. 

For the fourth-quarter fiscal 2017, Air Products anticipates adjusted earnings per share from continuing operations of $1.65-$1.70 per share, which at midpoint, also represents a 12% increase over last year.

Air Products is well placed to leverage the cyclical recovery in core industrial end-markets. The company has a strong project backlog. These projects are expected to be accretive to earnings and cash flow over the next few years. Acquisitions and new business wins are expected to continue to drive results.

Air Products also remains on track in delivering on its cost reduction programs, which should support its margins. The company is progressing well with its $600 million cost-cutting program.

Moreover, Air Products has significant amount of cash to invest in its core industrial gases business. The company expects to have roughly $8 billion to deploy in strategic, high-return opportunities (including acquisitions and large industrial gases projects) to create shareholders value over the next three years.  

Air Products and Chemicals, Inc. Price and Consensus

 

Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote

 

Zacks Rank & Other Stocks to Consider

Air Products currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Sociedad Quimica y Minera de Chile S.A. SQM, The Chemours Company CC and FMC Corporation FMC. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Sociedad Quimica has an expected long-term earnings growth rate of 32.5%.

Chemours has an expected long-term earnings growth rate of 15.5%.

FMC Corporation has an expected long-term earnings growth rate of 11.3%.

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