Shares of Airgas, Inc. ARG slid over 5% to close at $107.28 on Mar 20. The fall came after the company lowered its outlook for fourth-quarter fiscal 2015, based on potential uncertainty led by slump in global oil prices and impact of the strong dollar.
Airgas curtailed its fourth-quarter guidance of year-over-year organic sales growth to 1–2% from the previous projection of 6–7%. The company also trimmed its earnings per share guidance for the quarter to $1.13–$1.16 from the earlier range of $1.25–$1.30.
Airgas anticipates sales to remain challenging in the upcoming quarter, due to uncertainty caused by the significant and rapid decline in oil prices. Apart from the drop in oil prices, the negative impact of strong dollar on manufacturing exports also contributed to the slash in outlook.
In the third quarter, however, Airgas did not experience any significant headwinds and in fact, energy and chemical segments experienced strength. The company posted adjusted earnings of $1.23 a share in the third quarter, increasing 4% year over year driven by an uptick in the downstream energy and non-residential construction markets.
The company expects residential construction activity to increase in the near future, prompted by solid growth in rental welder business as well as increasing demand for staging of materials for energy-related construction projects.
Radnor, PA-based Airgas, through its subsidiaries, distributes industrial, medical and specialty gases as well as hardgoods in the U.S. The company also markets its products and services through e-Business, catalog and telesales channels.
Airgas currently carries a Zacks Rank #4 (Sell).
Better-ranked stocks in the chemical-diversified industry include Air Products & Chemicals Inc. APD, Mitsubishi Chemical Holdings Corporation MTLHY and Stepan Company SCL, each holding a Zacks Rank #2 (Buy).
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