Shares of Air Products and Chemicals, Inc. APD have popped 16.3% over the past six months. The company has also outperformed its industry’s growth of roughly 1.5% over the same time frame.
Air Products, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $52 billion and average volume of shares traded in the last three months was around 954.2K. The company has an expected long-term earnings per share growth rate of 12.3%, above the industry average of 10%.
Let’s take a look into the factors that are driving this industrial gases giant.
What’s Favoring the Stock?
Upbeat outlook for fiscal 2020 and healthy growth prospects have contributed to the run-up in Air Products’ shares.
Air Products, in its fiscal fourth-quarter call, said that it expects adjusted earnings for fiscal 2020 in the range of $9.35-$9.60 per share. This calls for a 14-17% rise year over year. The company expects adjusted EPS for first-quarter fiscal 2020 in the band of $2.05-$2.10, which indicates 10-13% rise year over year.
The Zacks Consensus Estimate for earnings for fiscal 2020 of $9.48 reflects an expected year-over-year growth of 15.5%. Moreover, earnings are expected to register a 11.8% growth in the fiscal first quarter.
Earnings estimates for fiscal 2020 are also going up over the past month. Over this period, the Zacks Consensus Estimate for the fiscal has moved up 1.4%.
Air Products’ strategic investments in high-return projects, new project wins, productivity actions and contributions of acquisitions should drive its fiscal 2020 results. Notably, the Lu'An syngas project in China is contributing to the results in the company’s Industrial Gases – Asia segment. In the last reported quarter, the company’s volumes this segment jumped roughly 16% on the back of new projects, including the Lu'An project.
The company also expects the Jazan gas and power project in Saudi Arabia to contribute to the growth in its adjusted per share in fiscal 2020.
The company has a total available capacity to deploy (over fiscal 2018-2022) nearly $18 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed more than half of this capacity.
Air Products also remains committed to boost productivity to improve its cost structure. The company is seeing positive impact of its productivity actions and is expected to benefit from additional productivity and cost improvement programs in fiscal 2020.
Moreover, Air Products remains committed to maximize returns to shareholders. the company generated roughly $2.7 billion of distributable cash flow during fiscal 2019. This marks an increase of nearly 20% from fiscal 2018 levels. This distributable cash flow enabled it to pay roughly $1 billion or around 40% as dividends to shareholders.
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
Some better-ranked stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Agnico Eagle Mines Limited AEM and Franco-Nevada Corporation FNV.
Kirkland Lake Gold has projected earnings growth rate of 96.3% for the current year and sports a Zacks Rank #1 (Strong Buy). The company’s shares have surged around 95% in a year’s time. You can see the complete list of today’s Zacks #1 Rank stocks here.
Agnico Eagle has a projected earnings growth rate of 168.6% for the current year and carries a Zacks Rank #2 (Buy). The company’s shares have rallied roughly 67% in a year’s time.
Franco-Nevada has estimated earnings growth rate of 46.2% for the current year and carries a Zacks Rank #2. The company’s shares have shot up roughly 43% in a year’s time.
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