Markets
KOP

Air Products to Gain From Project Investments, Cost Cuts

An image of glasses on top of newspaper
Credit: Shutterstock photo

We issued an updated research report on Air Products and Chemicals, Inc.APD on Dec 28.

Air Products has also built a strong project backlog. These projects are expected to be accretive to earnings and cash flow over the next few years. Moreover, strategic investments in high-return projects, new business deals and acquisitions are expected to drive results in fiscal 2018.

Air Products expects adjusted earnings per share of $1.60-$1.70 for first-quarter fiscal 2018, up 9-16% from the year-ago quarter. For fiscal 2018, Air Products expects adjusted earnings per share of $6.85-$7.05, up 9-12% year over year.

Air Products is expanding its footprint in China. The company has landed a second long-term oxygen and nitrogen supply contract with a leading global materials supplier in Guangdong in South China. The move will help to strengthen Air Products' position in the strategic industrial base as well as its relationship with this global customer. Air Products and Yankuang Group also entered into an agreement for a $3.5 billion coal-to-syngas production facility to be constructed in Yulin City, Shaanxi Province, China.

Moreover, Air Products, in July 2017, inked a long-term gas supply agreement with Huntsman. Under the deal, Air Products will build, own and operate a new steam methane reformer and cold box in Geismar, LA. Air Products facilities which will supply hydrogen, carbon monoxide and steam to Huntsman's Geismar operations are expected to be onstream in Jan 2020. The new state-of-the-art facility will provide high reliability and sustainability with enhanced energy efficiency and will help to lower emissions.

Air Products also remains on track in delivering on its cost-reduction programs, which should support its margins. The company is making a good progress with its $600 million cost-cutting program and has already delivered more than $475 million of cost savings and plans to deliver the balance in next two-three years.

Moreover, Air Products has significant amount of cash to invest in its core industrial gases business. The company expects to have at least $8 billion to deploy in strategic, high-return opportunities (including acquisitions and large industrial gases projects) to create shareholders value over the next three years.

Air Products has outperformed the industry it belongs to over the past three months. The company's shares have moved up 8.2% over this period, compared with roughly 4.2% gain recorded by its industry.

Zacks Rank & Stocks to Consider

Air Products carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO , Koppers Holding Inc. KOP and Westlake Chemical Corporation WLK , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Kronos Worldwide has expected long-term earnings growth of 5%. Its shares have skyrocketed 121.1% year to date.

Koppers has expected long-term earnings growth of 18%. Shares of the company have rallied 26.1% year to date.

Westlake Chemical has expected long-term earnings growth of 10.6%. Its shares have soared 30.7% year to date.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Air Products and Chemicals, Inc. (APD): Free Stock Analysis Report

Kronos Worldwide Inc (KRO): Free Stock Analysis Report

Koppers Holdings Inc. (KOP): Free Stock Analysis Report

Westlake Chemical Corporation (WLK): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

KOP APD KRO WLK

Other Topics

Stocks

Latest Markets Videos

Zacks

Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

Learn More