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Air Products (APD) to Post Q3 Earnings: What's in the Offing?

Air Products and Chemicals, Inc. APD is slated to release third-quarter fiscal 2020 results ahead of the bell on Jul 23. The company is likely to have gained from new projects and productivity initiatives in the quarter. However, the impact of lower merchant volumes is expected to get reflected in its results.

The industrial gases giant delivered a negative earnings surprise of 0.5% in the last reported quarter. Sales, however, beat expectations as higher volumes and prices more than offset unfavorable currency swings, the impacts of coronavirus and lower energy cost pass-through.

The company’s shares have gained 30.1% in the past year against the industry’s 5.6% decline.


 

Let’s see how things are shaping up for this announcement.

What do the Estimates Say?

The Zacks Consensus Estimate for Air Products’ fiscal third-quarter revenues is currently pegged at $2,084 million, suggesting a decline of 6.3% year over year.

The Zacks Consensus Estimate for revenues for the Industrial Gases — Americas segment is currently pegged at $855 million, calling for a decline of 10.5% year over year. The consensus mark for revenues in the Industrial Gases — Asia segment is pegged at $714 million, which suggests 5.2% year-over-year growth.

The Zacks Consensus Estimate for revenues in the Industrial Gases — EMEA segment stands at $435 million, indicating a 12.1% year-over-year decline.

The consensus mark for revenues for the Industrial Gases — Global segment is pegged at $61 million, which indicates a rise of 5.2% year over year.

Some Factors at Play

Air Products’ productivity actions, investments in high-return projects and benefits of acquisitions are expected to get reflected on fiscal third-quarter results. New projects are likely to have contributed to its volume growth.

The company remains committed to boost productivity to improve cost structure. It is seeing a positive impact of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to have supported margins in the to-be-reported quarter.

Air Products also has been benefiting from higher pricing over the past several quarters and the same is expected to have continued in the fiscal third quarter.

However, the company is likely to have faced headwinds from lower merchant volumes in the Americas and EMEA. Volume pressure in these regions is likely to have continued in the fiscal third quarter amid disruptions from the coronavirus pandemic.

The impact of unfavorable currency movements is also expected to get reflected on sales and earnings in the quarter to be reported.  
 

Air Products and Chemicals, Inc. Price and EPS Surprise

 

Air Products and Chemicals, Inc. Price and EPS Surprise

Air Products and Chemicals, Inc. price-eps-surprise | Air Products and Chemicals, Inc. Quote

 

What the Zacks Model Says

Our proven model doesn’t conclusively predict an earnings beat for Air Products this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. But that’s not the case here.

Earnings ESP: Earnings ESP for Air Products is 0.00%. The Zacks Consensus Estimate for the fiscal third quarter currently stands at $2.05. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Air Products currently carries a Zacks Rank #3.  

Stocks That Warrant a Look

Here are some companies in the basic materials space you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:

Nucor Corporation NUE, slated to release earnings on Jul 23, has an Earnings ESP of +3.15% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Newmont Corporation NEM, slated to release earnings on Jul 30, has an Earnings ESP of +11.11% and carries a Zacks Rank #3.

Barrick Gold Corporation GOLD, scheduled to release earnings on Aug 10, has an Earnings ESP of +1.37% and carries a Zacks Rank #3.

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