It has been about a month since the last earnings report for Air Products and Chemicals (APD). Shares have added about 2% 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 catalysts.
Air Products' Earnings and Sales Miss Estimates in Q4
Air Products recorded profit from continuing operations of $503.2 million or $2.27 per share in fourth-quarter fiscal 2019 (ended Sep 30, 2019), up from $452.9 million or $2.05 in the year-ago quarter. Earnings per share (EPS) missed the Zacks Consensus Estimate of $2.29.
The company delivered fiscal fourth-quarter revenues of $2,283.2 million, down 0.7% year over year. Volumes and pricing rose 5% and 3%, respectively, which were offset by 2% unfavorable currency, 3% from a contract modification in India and 4% lower energy cost pass-through. Revenues missed the Zacks Consensus Estimate of $2,321.9 million.
For fiscal 2019, adjusted earnings rose 10.2% year over year to $8.21 per share, while consolidated sales were essentially flat at $8,918.9 million on a year-over-year basis.
Revenues in the Industrial Gases — America segment fell around 5% year over year to $937 million. Higher pricing was more than offset by lower energy pass-through, lower volumes and unfavorable currency.
Sales in the Industrial Gases — Europe, Middle East, and Africa segment rose 11.8% year over year to $489.3 million. Strong pricing and higher volumes were offset by unfavorable currency, decline from the India contract modification and lower energy pass-through.
Sales in the Industrial Gases — Asia segment rose 15.6% year over year to $732 million. The upside was primarily driven by higher volumes (supported by new projects, including the Lu'An gasification project) and pricing. These were partly offset by unfavorable currency.
Air Products ended fiscal 2019 with cash and cash equivalents of $2,248.7 million, down 19.4% year over year. Long-term debt was down roughly 2% year over year to $2,907.3 million.
Net cash from operating activities were $2,969.9 million during fiscal 2019, up 16.6% year over year.
Air Products expects adjusted EPS for fiscal 2020 in the range $9.35-$9.60, which calls for a 14-17% rise year over year. The projection includes the expected contribution from the Jazan gas and power project.
The company expects adjusted EPS for first-quarter fiscal 2020 in the band of $2.05-$2.10, which indicates 10-13% rise year over year.
Air Products expects capital expenditure for fiscal 2020 in the range of $4-$4.5 billion, which includes expected spending for the Jazan gas and power project.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
At this time, Air Products and Chemicals has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Air Products and Chemicals has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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