Industrial gas producer and supplier, Praxair Inc. (PX), is slated to report its second quarter 2013 financial results on Jul 24, 2013. The company’s earnings per share in the last reported quarter were in line with the Zacks Consensus Estimate. Let’s see how things are shaping up for this announcement.
Growth Factors this Past Quarter
Praxair reported in-line earnings results in the first quarter 2013. Revenues in the quarter were adversely impacted by fewer working days, negative foreign currency translation, and cost pass-through; excluding which total revenue grew by 4%. Cost of sales increased 1.4% year over year and represented 56.7% of the total revenue. Adjusted operating profit was down 1% while adjusted margin stood at 21.6%.
Headwinds are expected to continue in the second quarter as well, as indicated by downward revisions in earnings estimate for Praxair.
Our proven model does not conclusively show that Praxair is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP ((Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.
Negative Zacks ESP: Praxair has an earnings ESP of -0.68% for the second quarter 2013, which indicates the difference between the Most Accurate estimate of $1.47 and the Zacks Consensus Estimate of $1.48.
Zacks #4 Rank (Sell): Praxair’s Zacks Rank #4 (Sell) lowers the predictive power of ESP because the Zacks Rank #4 when combined with a negative ESP makes surprise prediction difficult. We caution against stocks with Zacks #4 and #5 Ranks (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Cytec Industries Inc. (CYT), Earnings ESP of +2.14% and a Zacks Rank #1 (Strong Buy)
Methanex Corporation (MEOH), Earnings ESP of +1.05% and a Zacks Rank #3 (Hold)
Besides these companies, one of the prime competitor of Praxair, Air Products & Chemicals Inc. (APD) is slated to release its third quarter of fiscal 2013 (ended Jun 30, 2013) on Jul 23, 2013.
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