Air Products & Chemicals, Inc. (APD Quick QuoteAPD - Free Report) is slated to release first-quarter fiscal 2018 results before market opens on Jan 26.

 

The company reported adjusted earnings of $1.76 per share in fourth-quarter fiscal 2017, up 18% from the year-ago quarter. The bottom line also surpassed the Zacks Consensus Estimate of $1.69 per share.

 

Air Products posted net sales of $2.2 billion in the quarter, up 13% year over year, beating the Zacks Consensus Estimate of $2.09 billion.

 

Air Products surpassed the Zacks Consensus Estimate in three of the trailing four quarters while missing in one, with an average beat of around 2.6%.

 

Let’s see how things are shaping up for this announcement.

 

 

 

Air Products expects adjusted earnings per share of $1.60-$1.70 for first-quarter fiscal 2018, up 9-16% from the year-ago quarter. For fiscal 2018, Air Products projects adjusted earnings per share of $6.85-$7.05, up 9-12% year over year.

 

At the Industrial Gases — America segment, revenues for soon-to-be reported quarter is anticipated to witness a 5.6% rise from the year ago figure as the Zacks Consensus Estimate for the first quarter is pegged at $912 million. Operating income is also expected to increase 8% year over year as the Zacks Consensus Estimate is pegged at $242 million for the first quarter.

 

Air Products’ Industrial Gases — Asia segment’s revenues are expected to increase 19.2% from the year ago quarter as the Zacks Consensus Estimate for the first quarter is pegged at $522 million. At this segment, operating income is expected to increase 22.9% year over year as the Zacks Consensus Estimate is $145 million for the first quarter.

 

The Zacks Consensus Estimate for revenues for the Industrial Gases — EMEA segment is projected at $466 million for the quarter to be reported, reflecting an estimated rise of 16.5% year over year. Segment income is also expected to increase 13.7% year over year as the Zacks Consensus Estimate stands at $102 million for the first quarter.

 

Meanwhile, the Industrial Gases — Global segment is expected to witness an 8.8% year over year decline in revenues as the Zacks Consensus Estimate is pegged at $135 million for the first quarter. Segment income is expected to rise 31.1%, year over year as the Zacks Consensus Estimate is pegged at $10.8 million.

 

Air Products has built a strong project backlog. These projects are anticipated to be accretive to earnings and cash flow over the next few years. Strategic investments in high-return projects, new business deals and acquisitions are also expected to drive results.

 

Air Products also remains on track with delivering on cost-reduction programs, which is likely to support margins as well. It is making a good progress with its $600 million cost-cutting program and has already delivered more than $475 million of cost savings. 

 

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

 

Air Products’ shares have moved up 9.7% in the past three months, outperforming the industry’s gain of 7.2%.

 

 

 

 

Our proven model does not conclusively show that Air Products is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. This is not the case here as you will see below:

 

Zacks ESP: Air Products has an Earnings ESP of -1.03%. This is because the Most Accurate estimate is $1.64 per share while the Zacks Consensus Estimate is pegged at $1.66 per share.  You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

 

Zacks Rank: Air Products carries a Zacks Rank #2. Though a favorable rank increases the predictive power of ESP, a negative ESP makes surprise prediction difficult.

 

Conversely, Sell-rated stocks (Zacks Rank #4 or 5) should never be considered going into an earnings announcement.

 

 

Here are some companies in the basic materials space you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

 

LyondellBasell Industries NV (LYB Quick QuoteLYB - Free Report) has an Earnings ESP of +2.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

 

Agnico Eagle Mines Limited (AEM Quick QuoteAEM - Free Report) has an Earnings ESP of +20.99% and carries a Zacks Rank #2.

Huntsman Corporation (HUN Quick QuoteHUN - Free Report) has an Earnings ESP of +1.56% and carries a Zacks Rank #2.

 

 

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