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

Shares of Air Products and Chemicals, Inc. APD scaled a fresh 52-week high of $244.61 during the trading session on Jan 24, before retracting a bit to close at $243.95.

The Zacks Rank #3 (Hold) stock has a market cap of around $53.8 billion. Average volume of shares traded in the past three months is 1,083,9K. The company also has an expected long-term earnings per share growth rate of 12.3%. It surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters, delivering a positive surprise of 1.39%, on average.

The company’s shares have rallied 52.6% in the past year against the industry’s 26.3% decline.

 

 

Factors Driving the Rally

Strong earnings performance in first-quarter fiscal 2020, the recent dividend hike and an upbeat outlook are contributing to gain in the company’s shares. Its first-quarter fiscal 2020 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 volumes and pricing across all regions.

Air Products is gaining 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.

Air Products’ 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.

Notably, over the last 90 days, the Zacks Consensus Estimate for the company’s earnings moved 1.3% north to $9.47 per share for fiscal 2020. It suggests 15.4% rise from the year-ago reported figure.

For fiscal 2020, Air Products continues to expect adjusted earnings of $9.35-$9.60 per share, indicating 14-17% rise year over year.

The company expects adjusted earnings of $2.10 to $2.20 per share for second-quarter fiscal 2020, up 9-15% year over year.

Air Products also expects capital expenditure of $4-$4.5 billion for fiscal 2020.

Air Products and Chemicals, Inc. Price and Consensus

 

Air Products and Chemicals, Inc. Price and Consensus

Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote

Stocks to Consider

Some better-ranked stocks in the basic materials space are Daqo New Energy Corp. DQ, Royal Gold, Inc. RGLD and Commercial Metals Company CMC.

Daqo New Energy has a projected earnings growth rate of 326.3% for 2020. The company’s shares have rallied 47.9% in a year. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Royal Gold has an estimated earnings growth rate of 83.5% for fiscal 2020. It currently flaunts a Zacks Rank #1. Its shares have returned 38.3% in a year.

Commercial Metals has a Zacks Rank #2 (Buy) and a projected earnings growth rate of 20.2% for 2020. The company’s shares have rallied 26.3% in a year.

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