On Dec 30, 2015, Zacks Investment Research downgraded Praxair Inc. PX to a Zacks Rank #4 (Sell) from a Zacks Rank #3 (Hold). Going by the Zacks model, companies carrying a Zacks Rank #4 have chances of underperforming the broader market over the upcoming quarters.
Why a ‘Sell’ rank?
Demand for Praxair's products and services are largely influenced by economic conditions in the U.S. as well as in foreign countries where it serves. Global economic uncertainties, forex losses, diminishing level of industrialization and poor energy end-market business are some major factors weighing on the company’s top-line results in recent times. The company’s debt-to-capital ratio continues to rise over time. If unchecked, higher debt levels might increase the company's financial obligations and prove detrimental for its profitability in the near future. At the same time, Praxair faces stiff competition from other players in the industrial gas market that exposes it to risks of losing market share.
At present, investors remain dubious regarding Praxair's prospects in the quarters ahead, as evident from a downward revision in earnings estimates. Over the last 90 days, the Zacks Consensus Estimate for the stock has decreased 1% to $5.81 per share for 2015 and 2.4% to $6.17 for 2016.
Stocks to Consider
Better-ranked stocks in the industry include Compass Minerals International Inc. CMP, Innospec Inc. IOSP and LyondellBasell Industries N.V. LYB. All three stocks hold a Zacks Rank #2 (Buy).
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