Air Products and Chemicals, Inc. APD is slated to release fourth-quarter fiscal 2024 results before the opening bell on Nov. 7.
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The industrial gas giant beat the Zacks Consensus Estimate for earnings in three of the last four quarters while missing once. It pulled off a trailing four-quarter earnings surprise of around 1.4%, on average. The company delivered an earnings surprise of around 5.2% in the last reported quarter.
Air Products is expected to have benefited from cost-cutting and efficiency measures in the fiscal fourth quarter. These, along with pricing initiatives, are likely to have supported the company's performance despite headwinds from the softness in Europe and China.
APD’s shares have gained 5% in the past year compared with a 4.2% rise of the industry.
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Let’s see how things are shaping up for this announcement.
Zacks Model for APD
Our proven model predicts an earnings beat for APD 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 earning beat. That is the case here.
Earnings ESP: Earnings ESP for Air Products is +1.63%. This is because the Most Accurate Estimate is pegged at $3.50 while the Zacks Consensus Estimate stands at $3.44. 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.
What Do APD’s Estimates Say?
The Zacks Consensus Estimate for sales for the to-be-reported quarter currently stands at $3,192.7 million, roughly flat with the year-ago reported number.
The consensus estimate for the Americas segment’s revenues is currently pegged at $1,326.6 million, indicating a decrease of 1.8% year over year.
The same for the Asia segment’s revenues is pegged at $830.6 million, which suggests a 3.6% year-over-year rise.
The consensus estimate for the Europe segment’s revenues is pinned at $730.9 million, indicating a 2.7% year-over-year increase.
Factors at Play for APD
Air Products is expected to have benefited from cost and productivity actions and efforts to increase pricing in the fourth quarter. Investments in high-return projects, new business deals, acquisitions and productivity measures are all likely to have aided the company's performance.
The company is committed to its gasification strategy and is carrying out its expansion plans. These initiatives are likely to have aided its earnings and cash flows. APD is reaping the benefits of completing the second phase of the Jazan project in Saudi Arabia.
Air Products is also increasing productivity to enhance its cost structure. It is seeing positive results from its productivity actions. Increased productivity and cost-cutting efforts are expected to have boosted its margins in the fiscal fourth quarter.
However, the slowdown in China and Europe might have negatively impacted the company's business in the to-be-reported quarter. The weak Chinese economy is affecting volumes in the Industrial Gases - Asia unit. A sluggish economic recovery in China, as well as difficulties in the electronics industry, are expected to continue to hurt on the segment’s volumes. Air Products is hence seeing sluggish demand for merchant products in Europe. This might have adversely impacted volumes in the Europe segment in the fiscal fourth quarter.
Air Products and Chemicals, Inc. Price and EPS Surprise
Air Products and Chemicals, Inc. price-eps-surprise | Air Products and Chemicals, Inc. Quote
Other Basic Materials Stocks That Warrant a Look
Here are some other companies in the basic materials space you may want to consider as our model shows these too have the right combination of elements to post an earnings beat this quarter:
Royal Gold, Inc. RGLD, scheduled to release third-quarter earnings on Nov. 6, has an Earnings ESP of +1.13%.
The Zacks Consensus Estimate for Royal Gold's earnings for the third quarter is currently pegged at $1.33. RGLD currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Methanex Corporation MEOH, scheduled to release earnings on Nov. 6, has an Earnings ESP of +53.67% and carries a Zacks Rank #3.
The consensus estimate for MEOH’s earnings for the third quarter is currently pegged at 44 cents.
Hudbay Minerals Inc. HBM slated to release earnings on Nov. 13, has an Earnings ESP of +3.06% and carries a Zacks Rank #3.
The consensus estimate for HBM’s earnings for the third quarter is currently pegged at 5 cents.
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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.
