On Apr 1, 2014, Zacks Investment Research upgraded
), the supplier of industrial, medical and specialty gases and
hardgoods, to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell).
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Why the Upgrade?
On Jan 30, Airgas reported adjusted earnings of $1.18 a share in
the third-quarter fiscal 2014 (ended Dec 31, 2013), up 13% year
over year, driven by the realization of SAP-related benefits. The
results were in line with the Zacks Consensus Estimate. Revenues
also rose 3% year over year to $1.24 billion.
Airgas expects earnings per share (EPS) in the range of
$1.18-$1.23 for the fourth quarter of fiscal 2014 which reflects
an increase of 4-9% over prior year earnings. The company also
forecasts EPS in the range of $4.69-$4.74 full year of fiscal
2014, representing an 8-9% year-over-year rise.
Airgas is expected to benefit from its strong acquisition
pipeline. The company has a target of acquisitions worth total
sales of $150 million in fiscal 2014. Recently, the company
acquired Welding & Therapy Service, Inc. with five locations
in Indiana and Kentucky. Notably, the deal will help to better
the service and product offerings of both the companies. The deal
was Airgas' 11th acquisition in the fiscal year ended Mar 31,
2014 with annual revenues of nearly $82 million.
Airgas remains optimistic about the long-term prospects for the
U.S. manufacturing industries, driven by abundant supply of
low-cost energy and higher shipping costs from overseas. As per
the company, U.S. manufacturing will also benefit from future
growth in the non-residential construction and energy industries.
Based on this, in Mar 2014, the company declared the
reorganization of its North Central distribution region into two
separate regions. It's North Division has spilt into a redefined
North Central region, headquartered in Appleton, WI, and a new
Midwest region, headquartered in the Chicago metropolitan area.
This will help Airgas to improve its competitive position and
long-term growth prospects.
Additionally, in order to expand its European presence, Airgas
opened a retail location in Gelsenkirchen, Germany, the first
Red-D-Arc location in the country. The facility will offer
Red-D-Arc's full line of welding positioners, manipulators,
turning rolls and other weld automation products for sale and
lease, as well as a range of Red-D-Arc welding products and
equipments for both long-term and short-term rentals.
Other Stocks to Consider
Some other stocks in the same sector that warrant a look includes
Akzo Nobel NV
Cytec Industries Inc.
The Dow Chemical Company
). All these stocks hold a Zacks Rank #2 (Buy).