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Air Products' (APD) Shares Up 25% in 6 Months: Here's Why

Zacks Equity Research

Shares of Air Products and Chemicals, Inc. APD have popped around 25% over the past six months. The company has also significantly outperformed its industry’s decline of roughly 31% over the same time frame.

Air Products, a Zacks Rank #3 (Hold) stock, has a market cap of roughly $49.8 billion and average volume of shares traded in the last three months was around 1,043.8K. The company has an expected long-term earnings per share growth rate of 12.1%, above the industry average of 10.1%.


Let’s take a look into the factors that are driving this industrial gases giant.

Driving Factors

Better-than-expected earnings performance in the fiscal third quarter, upbeat outlook and healthy growth prospects have contributed to the rally in Air Products’ shares.

The company’s profits from continuing operations rose around 13% year over year to $488 million or $2.20 per share in the fiscal third quarter. Adjusted earnings went up 11% year over year to $2.17 per share, topping the Zacks Consensus Estimate of $2.14. Air Products gained from higher volumes and pricing in the quarter.

Air Products, in its third-quarter call, said that it now expects adjusted earnings for fiscal 2019 in the range of $8.20-$8.25 per share. This suggests more than 10% rise year over year at the midpoint. The company also expects adjusted earnings for fourth-quarter fiscal 2019 in the band of $2.26-$2.31 per share, which indicates 13-16% rise year over year.

The Zacks Consensus Estimate for earnings for fiscal 2019 of $8.24 reflects an expected year-over-year growth of 10.6%. Moreover, earnings are expected to register a 14.5% growth in the fiscal fourth quarter.

Air Products’ strategic investments in high-return projects, productivity actions and contributions of acquisitions should drive its fiscal 2019 results. Notably, the Lu'An syngas project in China is contributing to the results in the company’s Industrial Gases – Asia segment. The company expects the Lu'An project to contribute more than 25 cents per share to its earnings in fiscal 2019.

The company has a total available capacity to deploy (over fiscal 2018-2022) nearly $17 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed more than half of this capacity.

Air Products also remains committed to boost productivity to improve its cost structure. The company is seeing positive impact of its productivity actions and expects to benefit from additional productivity and cost improvement programs in fiscal 2019.

Air Products and Chemicals, Inc. Price and Consensus

Air Products and Chemicals, Inc. Price and Consensus

Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote

Stocks Worth a Look

Stocks worth considering in the basic materials space include Kinross Gold Corporation KGC, Arconic Inc. ARNC and NewMarket Corporation NEU, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Kinross has projected earnings growth rate of 150% for the current year. The company’s shares have surged around 76% in a year’s time.

Arconic has an estimated earnings growth rate of 50% for the current year. Its shares have gained roughly 17% in the past year.

NewMarket has an expected earnings growth rate of 16.2% for the current year. Its shares have gained around 20% in the past year.

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