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Why Is Air Products and Chemicals (APD) Up 2.8% Since Last Earnings Report?

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It has been about a month since the last earnings report for Air Products and Chemicals (APD). Shares have added about 2.8% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Air Products and Chemicals due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Air Products' Earnings Lag, Sales Top Estimates in Q1

Air Products logged earnings from continuing operations of $2.12 per share in first-quarter fiscal 2021 (ended Dec 31, 2020), down 1% from $2.14 recorded in the year-ago quarter. The bottom line was hurt by the impact of the coronavirus outbreak. Earnings per share in the reported quarter also missed the Zacks Consensus Estimate of $2.19.

In the quarter under review, the company delivered revenues of $2,375.2 billion, up around 5.3% year over year. The figure beat the Zacks Consensus Estimate of $2,321.3 million.

Pricing increased 2%, which along with 3% favorable currency and 1% higher energy pass-through, offset 1% decline in volumes on reduced demand and lower contribution from the Lu'An gasification project in Asia.

Segment Highlights

Revenues in the Industrial Gases - America segment were flat year over year at $933 million due to lower volumes, offset by higher pricing and energy pass-through.

Revenues in the Industrial Gases - EMEA segment rose 13% year over year to $563 million. Increased volumes driven by acquisitions and higher onsite volumes were partly offset by lower packaged gas demand. Higher pricing and favorable currency more than offset lower energy pass-through.

Revenues in the Industrial Gases - Asia segment increased 4% year over year to $718 million. The upside can be attributed to favorable currency and higher pricing and energy pass-through.

Financials

Air Products ended fiscal first quarter with cash and cash equivalents of around $5.8 billion, up 140.6% year over year. Long-term debt was up 130.8% year over year to $6,779.1 million.

Outlook

Air Products’ is confident in its profitable growth strategy of delivering innovative solutions for energy and environmental challenges despite the global economic uncertainty. It expects to meet customers’ and countries’ target for achieving cleaner and more sustainable solutions with its strong portfolio.

The company is expecting good opportunities in gasification, carbon capture and hydrogen for mobility. It expects to continue to develop and invest in strategic opportunities to drive growth for decades to come.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month. The consensus estimate has shifted -5.27% due to these changes.

VGM Scores

Currently, Air Products and Chemicals has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Air Products and Chemicals has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.


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