Technology

Air Products and Chemicals (APD) Down 2.3% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Air Products and Chemicals (APD). Shares have lost about 2.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Air Products and Chemicals due for a breakout? 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 & Sales Lag Estimates in Q3

Air Products logged earnings from continuing operations of $2.01 per share in third-quarter fiscal 2020 (ended Jun 30, 2020), down roughly 9% from $2.20 recorded in the year-ago quarter. The bottom line in the reported quarter was hurt by the impacts of the coronavirus outbreak. Earnings per share for the reported quarter also missed the Zacks Consensus Estimate of $2.05.

The company delivered fiscal third-quarter revenues of $2,065.2 million, down 7.1% year over year. It also missed the Zacks Consensus Estimate of $2,083.6 million.

Pricing increased 2%, which was more than offset by 3% lower volume, 2% unfavorable currency, 9% unfavorable impact from the coronavirus pandemic and 4% lower energy pass-through.

Segment Highlights

Revenues in the Industrial Gases - America segment fell 11% year over year to $850 million due to lower volume, lower energy pass-through and unfavorable currency.

Sales in the Industrial Gases - EMEA segment decreased 13% year over year to $430 million. Higher pricing was offset by unfavorable currency, lower energy pass-through and lower volume.

Sales in the Industrial Gases - Asia segment decreased 4% year over year to $652 million. The downside was due to lower volume and unfavorable currency.

Financials

Air Products ended the quarter with cash and cash equivalents of $3,921.4 million, up 45.4% year over year. Long-term debt was up 139.6% year over year to $7,073.2 million.

Net cash from operating activities was $2,013.2 million for the nine months ended Jun 30, 2020.

Outlook

Air Products said that it will continue to generate value for shareholders over the long term and invest in world-scale, sustainability-focused projects, notwithstanding the challenging environment.
 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

VGM Scores

Currently, Air Products and Chemicals has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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