We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Air Products (APD) Gains on Project Investments, Productivity
Read MoreHide Full Article
Air Products and Chemicals, Inc. (APD - Free Report) is benefiting from investments in high-return projects, new business deals, acquisitions and productivity initiatives. However, the industrial gases giant faces headwinds from energy cost inflation.
Air Products, a Zacks Rank #3 (Hold) stock, is well-placed to gain from its investments in industrial gas projects and project wins. It remains committed to its gasification strategy and is executing its growth projects. These projects are expected to be accretive to earnings and cash flows. The company has a total available capacity to deploy (over fiscal 2018-2027) around $34.2 billion in high-return investments aimed at creating significant shareholder value. It has already spent or committed roughly 74% of the capacity.
The company, in October 2021, completed the asset acquisition and project financing transactions of the $12-billion Jazan project in in Saudi Arabia. It expects to close the Phase Two of this project in 2023.
Last year, it also announced the $4.5 billion world-class clean energy complex in Louisiana. The project, the company’s largest-ever investment, is expected to produce more than 750 million standard cubic feet per day of blue hydrogen for local and global markets by 2026.
Air Products, in April 2020, also completed the buyout of five steam methane reformer hydrogen production plants for $530 million from PBF Energy. The PBF deal is expected to be accretive to the company’s bottom line. Air Products, in Apr 2022, also purchased Air Liquide's industrial gases business in the United Arab Emirates ("UAE"), including liquid bulk, packaged gases and specialty gases. APD also acquired Air Liquide's majority share in MECD, which owns and operates a liquid CO2 manufacturing site in Bahrain. By purchasing these businesses, Air Products broadened its footprint and regional presence in the UAE and Bahrain
The company is also boosting productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead. Air Products also has also been benefiting from higher pricing. Higher merchant demand is also driving its volumes.
However, Air Products faces headwinds from cost inflation. It is witnessing higher power costs in its merchant business. The company is seeing significantly higher energy costs, especially in EMEA due to the considerably high natural gas and electricity costs. It is expected to continue to face headwinds from the power cost inflation moving ahead. As such, higher power costs are likely to weigh on margins over the near term.
The company is also exposed to volume pressure in the Americas segment due to maintenance outages. Hydrogen volumes fell on a sequential comparison basis in the second quarter of fiscal 2022 due to outages. The company expects high levels of planned outages in the fiscal third quarter. As such, volumes are expected to remain under pressure over the near term. Maintenance outages have also pushed up costs in this segment.
Air Products and Chemicals, Inc. Price and Consensus
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , Albemarle Corporation (ALB - Free Report) and Cabot Corporation (CBT - Free Report) .
Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 163.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 27.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 5.8%, on average. NTR has rallied 50% in a year.
Albemarle has a projected earnings growth rate of 203.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 105% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 41% in a year. The company flaunts a Zacks Rank #1.
Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 21.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 5.2% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 16% over a year.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Air Products (APD) Gains on Project Investments, Productivity
Air Products and Chemicals, Inc. (APD - Free Report) is benefiting from investments in high-return projects, new business deals, acquisitions and productivity initiatives. However, the industrial gases giant faces headwinds from energy cost inflation.
Air Products, a Zacks Rank #3 (Hold) stock, is well-placed to gain from its investments in industrial gas projects and project wins. It remains committed to its gasification strategy and is executing its growth projects. These projects are expected to be accretive to earnings and cash flows. The company has a total available capacity to deploy (over fiscal 2018-2027) around $34.2 billion in high-return investments aimed at creating significant shareholder value. It has already spent or committed roughly 74% of the capacity.
The company, in October 2021, completed the asset acquisition and project financing transactions of the $12-billion Jazan project in in Saudi Arabia. It expects to close the Phase Two of this project in 2023.
Last year, it also announced the $4.5 billion world-class clean energy complex in Louisiana. The project, the company’s largest-ever investment, is expected to produce more than 750 million standard cubic feet per day of blue hydrogen for local and global markets by 2026.
Air Products, in April 2020, also completed the buyout of five steam methane reformer hydrogen production plants for $530 million from PBF Energy. The PBF deal is expected to be accretive to the company’s bottom line. Air Products, in Apr 2022, also purchased Air Liquide's industrial gases business in the United Arab Emirates ("UAE"), including liquid bulk, packaged gases and specialty gases. APD also acquired Air Liquide's majority share in MECD, which owns and operates a liquid CO2 manufacturing site in Bahrain. By purchasing these businesses, Air Products broadened its footprint and regional presence in the UAE and Bahrain
The company is also boosting productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead. Air Products also has also been benefiting from higher pricing. Higher merchant demand is also driving its volumes.
However, Air Products faces headwinds from cost inflation. It is witnessing higher power costs in its merchant business. The company is seeing significantly higher energy costs, especially in EMEA due to the considerably high natural gas and electricity costs. It is expected to continue to face headwinds from the power cost inflation moving ahead. As such, higher power costs are likely to weigh on margins over the near term.
The company is also exposed to volume pressure in the Americas segment due to maintenance outages. Hydrogen volumes fell on a sequential comparison basis in the second quarter of fiscal 2022 due to outages. The company expects high levels of planned outages in the fiscal third quarter. As such, volumes are expected to remain under pressure over the near term. Maintenance outages have also pushed up costs in this segment.
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
Better-ranked stocks worth considering in the basic materials space include Nutrien Ltd. (NTR - Free Report) , Albemarle Corporation (ALB - Free Report) and Cabot Corporation (CBT - Free Report) .
Nutrien, sporting a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 163.2% for the current year. The Zacks Consensus Estimate for NTR's current-year earnings has been revised 27.5% upward over the last 60 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missed once. It has a trailing four-quarter earnings surprise of roughly 5.8%, on average. NTR has rallied 50% in a year.
Albemarle has a projected earnings growth rate of 203.7% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 105% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has rallied roughly 41% in a year. The company flaunts a Zacks Rank #1.
Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 21.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 5.2% upward in the past 60 days.
Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 16% over a year.