On Jul 7, 2014, we issued an updated research report on
). Apart from being the largest industrial gas producer and
supplier in the Americas, the company is also one of the largest in
the world. With the company experiencing 8.5% earnings growth in
the past five years, we expect a further increase of 11.70% in the
next five years versus 10.6% predicted for the industry.
We believe Praxair is making earnest efforts to benefit from the
booming demand for industrial gases. In this regard, the start-up
of a new packaged gas filling plant in North Dakota, an oxygen
supply plant in Uruguay and an air separation plant in Tennessee
are worth mentioning.
Also, Praxair has progressed towards expanding its gas distribution
capacity. In Mar 2014, the company acquired two packaged gas
distributors, United Welding Supplies in Texas and Best Welders
Supply in Oklahoma; while Michigan-based independent packaged gas
and welding products distributor, Lake Welding Supply Company, were
acquired in Apr 2014.
Praxair anticipates generating roughly 25% of sales from the
Manufacturing end market, 17% from Metals, 14% from Energy, 11%
from Chemicals, 6% from Healthcare, 8% from Electronics, 8% from
Food & Beverages, 2% from Aerospace and 9% from miscellaneous
sources by 2017. In addition, the company intends to achieve high
single-digit sales growth, of roughly 8% CAGR (compound annual
growth rate). This growth rate will include 2−3% contribution from
base volume growth, 1−2% from price, 3−4% growth from projects and
about 1% from acquisitions.
However, mounting production costs remain a primary concern for
Praxair. Recently, the company hiked prices of its industrial,
specialty and medical gases to compensate for rising costs. At the
same time, due to its high international presence, the company
faces risks from foreign currency exchange rates, import and export
controls, and other economic, political and regulatory policies of
The Zacks Consensus Estimate for Praxair is pegged at $6.45 for
2014 and $7.20 for 2015. These estimates reflect year-over-year
growth of 8.8% for 2014 and 11.7% for 2015.
Praxair currently has a market capitalization of $38.8 billion and
carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the
A. Schulman, Inc.
). All these stocks hold a Zacks Rank #2 (Buy).
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