Air Products (APD) Shares Up 19% in 6 Months: Here's Why

Air Products and Chemicals, Inc.’s APD shares have gained 19.2% over the past six months against the industry’s decline of 11.3%.

The company has a market cap of roughly $62 billion and an average volume of shares traded in the last three months of 1,101K. Air Products has expected long-term earnings per share growth of 8.9%.

Let’s take a look into the factors that are driving this Zacks Rank #3 (Hold) company.



Factors Driving Air Products

The company’s investments in high-return projects, project wins and productivity actions should drive its fiscal 2020 results. New projects are contributing to its volume growth. The company is also boosting productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions, and is expected to benefit from additional productivity and cost-improvement programs in fiscal 2020.

The Zacks Consensus Estimate for fiscal 2020 earnings of $8.48 suggests growth of 3.3% from the year-ago reported figure.

The company is also poised for growth on the back of its project investments. Notably, its project in the United States, which is worth $500 million, showcases its core strengths and capabilities for supplying nitrogen from an air separation unit (ASU) and hydrogen from a steam methane reformer (SMR). The project will likely boost the size and supply capacity of Air Products' extensive hydrogen pipeline system in the Gulf Coast.

Further, the company recently inked a deal with ACWA Power and NEOM for a $5-billion green hydrogen-based ammonia manufacturing facility powered by renewable energy. Notably, the project will produce 650 tons of hydrogen per day by electrolysis, using Thyssenkrupp technology, nitrogen by air separation using Air Products’ technology, and 1.2 million tons per year of green ammonia using Haldor Topsoe technology.

Air Products has also completed the buyout of five steam methane reformer hydrogen production plants for $530 million from PBF Energy. The PBF deal is expected to be accretive to the company’s bottom line in fiscal 2020. Air Products also expects to complete the $12-billion Jazan gasification project in Saudi Arabia by October 2020.

The company has a total available capacity to deploy (over fiscal 2018-2022) around $18 billion in high-return investments aimed at creating significant shareholder value. It has already spent or committed roughly 65% of the capacity.

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 to Consider

Some better-ranked stocks in the basic materials space are Royal Gold, Inc. RGLD, Sandstorm Gold Ltd SAND and Harmony Gold Mining Company Limited HMY.

Royal Gold has a projected earnings growth rate of 62.1% for the current year. The company’s shares have gained 15% in a year. It currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sandstorm Gold has a projected earnings growth rate of 55.6% for the current year. The stock has surged around 72% in a year. It currently has a Zacks Rank of 2 (Buy).

Harmony Gold has an expected earnings growth rate of 264.3% for 2020. The company’s shares have rallied 158.1% in the past year. It is presently a Zacks #2 Ranked player.

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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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