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Air Products (APD), AES to Invest in Green Hydrogen Plant

Air Products and Chemicals, Inc. APD recently announced its plans to enter into a joint venture with The AES Corporation AES to build a green hydrogen production facility in Wilbarger County, TX. The companies will invest approximately $4 billion to build and operate this facility under a 30-year contract.

The plant will serve the growing demand for zero-carbon intensity fuels and produce an enormously clean source of energy. It will employ wind and solar energy and be the largest green hydrogen facility in the United States to do so by far.

This joint venture will have an electrolyzer capacity that can produce more than 200 metric tons of green hydrogen per day. Moreover, the project can generate about 1.4 GW of wind and solar power. It is anticipated that the facility will reduce more than 50 million metric tons of CO2 throughout the project. Both parties will have an equal share in the renewable energy and electrolyzer assets. Air Products will be the exclusive off-taker and marketer of green hydrogen.

This project is capable of generating approximately 1,300 construction, 115 permanent operations and 200 transportation and distribution jobs. On top of that, the project can initiate about $500 million in tax benefits to Texas during its course.

In the forthcoming years, the demand for green hydrogen for mobility and industrial uses is anticipated to increase substantially nationwide. APD and AES expect the facility to be ready to start its commercial operations in 2027. The joint venture is subject to the receipt of local permits as well as local, state and federal incentives.

This mega-scale clean hydrogen production facility will benefit from Air Product’s industry-leading capabilities in hydrogen production and AES’s global leadership in innovations.

Based in Arlington, AES is a global power company that runs its business across four continents in 14 countries. The company intends to deliver greener, smarter energy solutions to its customers.

Headquartered in Allentown, PA, Air Products makes industrial gasses as well as a variety of polymer and performance chemicals. It also supplies processing equipment.

In the fiscal fourth quarter of 2022,  APD benefited from increased pricing, higher volumes and higher energy cost pass-through. New plants, recovery in hydrogen and improved merchant demand drove volumes in the last reported quarter. However, the results were partially offset by unfavorable currency translation.

APD reported earnings per share (EPS) of $2.89 for the fiscal fourth quarter of 2022 compared with earnings of $2.51 per share in the prior-year quarter. The quarter's total revenues came in at $3,570 million, up around 26% year over year.
APD expects adjusted EPS in the range of $2.60 to $2.80 for the first quarter of fiscal 2023, indicating a rise of 5-13% from the year-ago quarter. It anticipates full-year fiscal 2023 adjusted earnings per share of $11.20-$11.50, suggesting growth of 9 to 12% year over year.

Price Performance

Air Products’ shares have gained 5.7% in the past year against the industry’s decline of 2.5%.

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Zacks Rank & Key Picks

Air Products currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks worth considering in the basic materials space include Bunge Limited BG and Reliance Steel RS. While BG currently flaunts a Zacks Rank #1, RS carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge Limited has an expected earnings growth rate of 7.4% for the current year.  Its earnings estimates for 2022 are pegged at $13.89 per share. BG’s earnings estimates have been revised 9.3% upward in the past 60 days. It has a trailing four-quarter average surprise of 18.7%. The stock has gained 8.7% in a year.

Reliance Steel estimates earnings of $28.71 for the current year, indicating a growth rate of 29.8%. The consensus estimate for RS’s earnings for the current year has been revised 0.06% upward in the past 60 days. It has a trailing four-quarter average surprise of 13.6% on average. RS has gained 29.8% in a year.

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Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report

Reliance Steel & Aluminum Co. (RS) : Free Stock Analysis Report

The AES Corporation (AES) : Free Stock Analysis Report

Bunge Limited (BG) : Free Stock Analysis Report

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