On Feb 12, 2013, we upgraded our recommendation on industrial
) to Neutral based on its better-than-expected first-quarter
fiscal 2013 results and upbeat guidance.
Why the Upgrade?
Air Products posted earnings from continued operations of
$1.30 a share, beating the Zacks Consensus Estimate of $1.29.
Revenues climbed roughly 10% year over year to $2,562.4 million,
also exceeding the Zacks Consensus Estimate of $2,471
Sales were boosted by Indura and DA NanoMaterials
acquisitions. Management raised its earnings guidance for fiscal
2013 factoring in the positive impact of share buybacks.
Air Products, which currently carries a short-term Zacks Rank
#2 (Buy), benefits from a diverse customer base, sustained
pricing power and cost-reduction measures. New business deals and
strategic investments are expected to support results in fiscal
Moreover, the acquisition of a 67% stake in Chilean industrial
gas company, Indura S.A., should usher in substantial growth
opportunity for Air Products. We are also encouraged by the
incremental opportunities in liquefied natural gas (LNG)
Air Products has also embarked on headcount reduction, keeping
a tight control on expenses and undertaking work process
improvement initiatives. Moreover, it remains committed to
maximize returns to shareholders.
However, volume in the core Merchant Gases segment is expected
remain under pressure partly due to the recessionary conditions
in Europe. The electronics business may continue to see weak
Moreover, higher energy costs pose a threat to margin
expansion. We also take into account the company's high debt
Other Stocks to Consider
Other companies in the chemical industry having favorable
Zacks Rank are
) with a Zacks Rank #1 (Strong Buy),
) with a Zacks Rank #1 (Strong Buy) and
L'Air Liquide SA
) with a Zacks Rank #2 (Buy).
AIR LIQUIDE-ADR (AIQUY): Get Free Report
AIR PRODS & CHE (APD): Free Stock Analysis
ARKEMA-ADR (ARKAY): Get Free Report
BASF SE (BASFY): Free Stock Analysis Report
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