Industrial gas producer and supplier Praxair Inc. (PX) hiked the prices of industrial gases for its bulk gas customers in the U.S. The revised prices will be effective from Nov 1, 2014.
Prices of nitrogen, oxygen, argon, hydrogen and carbon dioxide have been increased up to 10%. Praxair cited higher production and distribution costs as the primary reason behind this revision.
In Jul 2014, Praxair had increased prices of nitrogen, oxygen, hydrogen, helium and carbon dioxide by roughly 15%. Further, facility fees or monthly bulk product charges and cylinder rental rates were increased by 10% while prices for hardgoods were also revised up by 10%.
We believe Praxair’s profitability is highly dependent on costs of sales and expenses, as any unwarranted increase in these will lower the profitability and vice versa. In the past five years, the company’s cost of sales has increased by 34%.
Praxair is slated to report its third-quarter 2014 results on Oct 29, 2014 before the market opens. The Zacks Consensus Estimate is pegged at $1.63 for the quarter, at $6.38 for 2014 and $7.11 for 2015. These estimates represent year-over-year growth of 7.9% for the third quarter, 7.7% for 2014 and 11.3% for 2015.
With a market capitalization of $35.7 billion, Praxair currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Valhi, Inc. (VHI), Koppers Holdings Inc. (KOP) and LyondellBasell Industries N.V. (LYB). While Valhi sports a Zacks Rank #1 (Strong Buy), both Koppers Holdings and LyondellBasell Industries carry a Zacks Rank #2 (Buy).
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