Danbury, CT-based Praxair Inc. (PX), a leading industrial gas producer and supplier, is set to benefit from the growing demand for industrial gases due to their increased applications in various fields.
Nitrogen, among other industrial gases, witnesses high demand. The gas is used primarily in industries including oil and gas, aerospace and aircraft, automotive and transport equipment, chemicals, energy, food and beverage, healthcare, metal production, pharmaceutical and biotechnology, refining, welding and metal fabrication.
Recently, Praxair decided to enhance its production capacity of industrial gases by expanding the facilities in Kirtland, NM. The initiative will include construction of a new nitrogen production facility that will cater to the needs of the oil and gas industry in southwestern Colorado, northwestern New Mexico and certain areas in Arizona and Utah.
In Jun 2014, Praxair started a new packaged gas-filling plant in North Dakota, an oxygen supply plant in Uruguay and an air separation plant in Tennessee. Besides starting new plants, the company also believes in making strategic acquisitions and meaningful dispositions in order to improve profitability. In this regard, acquisitions in Texas, Oklahoma and Michigan, along with the takeover of a mid-Atlantic joint venture, purchase of a gases business in Italy and a divestiture in France are worth mentioning.
We believe Praxair’s efforts to enhance its production capacity will help it to capitalize on the growing preferences for its world class technology, high quality products and gas supply services. In the past five years, the company’s earnings have grown by 8.5% while we project an 11.7% increase in the next five years.
Currently, the Zacks Consensus estimate for Praxair is pegged at $6.45 for 2014 and $7.20 for 2015, representing year-over-year growth of 8.8% and 11.7% respectively. For second-quarter 2014, the Zacks estimate is $1.59. The company is slated to release its second-quarter results on Jul 23, before market opens.
With a $38.6 billion market capitalization, Praxair presently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Ashland Inc. (ASH), Celanese Corporation (CE) and LyondellBasell Industries NV (LYB). All these stocks hold a Zacks Rank #2 (Buy).
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