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Air Products (APD) Extends Contract With Barrick Goldstrike

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Air Products & Chemicals Inc. (APD - Free Report) has extended its contract with Barrick Goldstrike. Per the agreement, Air Products will continue to maintain and operate Barrick Gold Corporation’s oxygen plant in Elko, NV.

In addition to operating the plant, Air Products plans to install new oxygen plant process equipment and technology to help Barrick increase gold production and minimize emissions and operating costs. Oxygen is used by Barrick for controlling temperature in its roaster process.

Air Products’ Industrial Gas Plant Support (IGPS) has been working with Barrick to implement various process improvement projects including main air compressor services and molecular sieve change-outs. Its IGPS organization is focused on providing equipment and spare parts and engineering and operating services across the globe. Air Products has designed, maintained and manufactured more than 2,200 facilities in more than 40 countries. The company also has extensive experience with customer-owned plants.

Shares of Air Products have moved up 6.6% in the last three months, underperforming the industry’s 8.7% growth.

 

 

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 fourth-quarter fiscal 2017, Air Products anticipates adjusted earnings per share from continuing operations of $1.65-$1.70, 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. 

 

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 The Chemours Company (CC - Free Report) and FMC Corporation (FMC - Free Report) . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

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

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

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