Air Products and Chemicals, Inc.'s APD stock looks promising at the moment. We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let’s take a look into the factors that make this Zacks Rank #2 (Buy) stock an attractive choice for investors right now.
What Makes APD an Attractive Pick?
An Outperformer: Air Products has outperformed the industry over the past two years. The company’s shares are up roughly 9.9% over this period, outperforming the industry’s gain of a paltry 0.2% over the same time frame.
Positive Earnings Surprise History: Air Products’ has outpaced the Zacks Consensus Estimate in three of the trailing four quarters, delivering a positive average earnings surprise of roughly 3.9%.
Estimates Moving Up: Annual estimates for Air Products have moved up over the past month, reflecting analysts’ confidence on the stock. Over this period, the Zacks Consensus Estimate for fiscal 2019 has increased by around 0.5% to $8.19 per share. The Zacks Consensus Estimate for fiscal 2020 has also moved up 3.8% over the same timeframe to $9.39.
Healthy Growth Prospects: The Zacks Consensus Estimate for earnings for fiscal 2019 for Air Products reflects an expected year-over-year growth of 9.9%. Moreover, earnings are expected to register a 14.6% growth in fiscal 2020. The company also has an expected long-term earnings per share growth of 11.8%.
Superior Return on Equity (ROE): Air Products’ ROE of 15.3%, as compared with the industry average of 10.5%, manifests the company’s efficiency in utilizing shareholder’s funds.
Upbeat Prospects: Air Products, in its fourth-quarter fiscal 2018 call, said that it sees adjusted earnings for fiscal 2019 to be in the range of $8.05 to $8.30 per share, reflecting a 10% increase at the midpoint year over year. The company also expects adjusted earnings to be in the band of $1.85 to $1.90 per share for first-quarter fiscal 2019, up 5% at the midpoint year over year.
Air Products has built a strong project backlog. These projects are anticipated to be accretive to earnings and cash flow over the next few years. It will also benefit from its actions to cut operational costs.
Moreover, strategic investments in high-return projects, new business deals and acquisitions are likely to drive fiscal 2019 results. The Lu'An syngas project in China, which is now fully onstream, significantly contributed to the sales growth in the company’s Industrial Gases – Asia segment in the fiscal fourth quarter. The company expects the Lu'An project to contribute more than 25 cents per share to its earnings in fiscal 2019.
Air Products has a capacity to deploy at least $14 billion in high-return investments over the next four years, aimed at creating significant shareholder value.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. Price and Consensus | Air Products and Chemicals, Inc. Quote
Other Stocks to Consider
Other top-ranked stocks worth considering in the basic materials space include The Mosaic Company MOS, CF Industries Holdings, Inc. CF and Ashland Global Holdings Inc. ASH, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Mosaic has expected long-term earnings growth rate of 7%. Its shares have surged 45% in the past year.
CF Industries has expected long-term earnings growth rate of 6%. Its shares have gained 14% in a year.
Ashland has expected long-term earnings growth rate of 10%. Its shares have gained 11% in the past year.
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