Air Products and Chemicals, Inc.’s APD shares have gained 10.8% over the past three months. The company has also outperformed its industry’s decline of 3.7% over the same time frame. It has also topped the S&P 500’s roughly 9.8% rise over the same period.
Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) company.
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What’s Favoring the Stock?
Better-than-expected earnings performance in the fiscal third quarter and upbeat outlook have contributed to the gain in the company's shares. Air Products’ earnings of $2.62 per share for third-quarter fiscal 2022 beat the Zacks Consensus Estimate of $2.61. Revenues climbed around 22% year over year to $3,189.3 million, topping the Zacks Consensus Estimate of $3,060 million. The company benefited from increased pricing, higher equity affiliates' income and higher volumes in the quarter.
Air Products, in its third-quarter call, said that it continues to expect full-year fiscal 2022 adjusted earnings per share (EPS) of $10.20-$10.40, indicating a 14% growth from the prior-year’s adjusted EPS. For the fourth quarter of fiscal 2022, the company expects adjusted EPS in the range of $2.68-$2.88, suggesting a rise of 7-15% from fourth-quarter fiscal 2021 adjusted EPS.
Air Products is benefiting from investments in high-return projects, new business deals, acquisitions and productivity initiatives. It remains committed to its gasification strategy and is executing its growth projects. These projects are expected to be accretive to earnings and cash flows. The company has a total available capacity to deploy (over fiscal 2018-2027) around $35 billion in high-return investments aimed at creating significant shareholder value. It has already spent or committed roughly 73% of the capacity.
The company is also boosting productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead. Air Products also has been benefiting from higher pricing. Higher merchant demand is also driving its volumes.
Air Products also remains committed to maximize returns to shareholders leveraging strong balance sheet and cash flows. The company, earlier this year, increased its quarterly dividend by 8% to $1.62 per share from $1.50 per share. This marked the 40th straight year of dividend increase. The company expects to pay more than $1.4 billion of dividend to shareholders in 2022.
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
Better-ranked stocks worth considering in the basic materials space include Albemarle Corporation ALB, Daqo New Energy Corp. DQ and Sociedad Quimica y Minera de Chile S.A. SQM.
Albemarle has a projected earnings growth rate of 425.7% for the current year. The Zacks Consensus Estimate for ALB's current-year earnings has been revised 67.9% upward in the past 60 days.
Albemarle’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 24.2%, on average. ALB has gained around 19% in a year and currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Daqo New Energy, currently carrying a Zacks Rank #1, has an expected earnings growth rate of 177.5% for the current year. The Zacks Consensus Estimate for DQ's earnings for the current fiscal has been revised 20.8% upward in the past 60 days.
Daqo New Energy’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 10.8%. DQ has gained around 29% over a year.
Sociedad has a projected earnings growth rate of 513.7% for the current year. The Zacks Consensus Estimate for SQM’s current-year earnings has been revised 32.6% upward in the past 60 days.
Sociedad has rallied roughly 77% in the past year. SQM currently carries a Zacks Rank #2 (Buy).
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