Air Products and Chemicals, Inc. APD is expected to gain from its project investments, productivity actions and new business deals. However, the slowdown in Europe and China is a concern.
The company’s shares are down 15% over a year, compared with a 16.4% decline of its industry.
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Let’s find out why this Zacks Rank #3 (Hold) stock is worth retaining at the moment.
High-return Projects, Productivity Aid APD
Air Products is expected to benefit from its investments in high-return industrial gas projects and productivity measures. Higher volumes and pricing are also likely to support its results.
The company remains focused on its gasification strategy and is executing its growth projects. These projects are expected to be accretive to earnings and cash flows. APD is realizing the benefits of the completion of the second phase of the Jazan project in Saudi Arabia. The company has a total available capacity to deploy (over fiscal 2023-2032) $32.5 billion in high-return investments aimed at creating significant shareholder value.
Air Products is also driving productivity to improve its cost structure. It is seeing the positive impacts of its productivity actions. Benefits from additional productivity and cost improvement programs are likely to support its margins moving ahead.
The company also remains committed to maximize returns to shareholders leveraging strong balance sheet and cash flows. APD, earlier this year, increased its quarterly dividend by 8% to $1.75 per share from $1.62 per share. This marked the 41st straight year of dividend increase. The company expects to pay roughly $1.5 billion in dividends to shareholders in 2023.
Slowdown in Europe & China Ails
The slowdown in China and Europe may affect the company’s business in these regions. The sluggish China economy might impact volumes in the Industrial Gases - Asia segment. A slower economic recovery in China and the softness in electronics may affect the segment’s volumes. Air Products is also seeing weak demand for merchant products in Europe. The lack of growth in industrial output in Europe is a concern over the near term.
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
Better-ranked stocks worth a look in the basic materials space include Denison Mines Corp. DNN, Axalta Coating Systems Ltd. AXTA and The Andersons Inc. ANDE.
Denison Mines has a projected earnings growth rate of 100% for the current year. DNN has a trailing four-quarter earnings surprise of roughly 225%, on average. The stock is up around 55% in a year. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, the Zacks Consensus Estimate for Axalta Coating Systems’ current year has been revised upward by 8.2%. AXTA, carrying a Zacks Rank #1, beat the Zacks Consensus Estimate in three of the last four quarters while missing in one quarter, with the average earnings surprise being 6.7%. The company’s shares have gained around 17% in the past year.
Andersons currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for ANDE's current-year earnings has been revised 5.1% upward over the past 60 days. Andersons beat the Zacks Consensus Estimate in three of the last four quarters. It delivered a trailing four-quarter earnings surprise of 32.8%, on average. ANDE shares have rallied roughly 37% in a year.
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