What Makes Air Products' (APD) Stock A Solid Choice Right Now
Zacks Investment Research | Jan 09, 2020 06:28AM ET
Air Products and Chemicals, Inc.’s (NYSE:APD) stock looks promising at the moment. The industrial gases giant is well placed for growth on the back of its project investments, new business deals and acquisitions.
We are positive on the company’s prospects and believe that the time is right for you to add the stock to portfolio as it looks promising and is poised to carry the momentum ahead.
Let's see what makes this Zacks Rank #2 (Buy) stock a compelling investment option at the moment.
Price Performance
Air Products has outperformed the industry it belongs to over a year. The company’s shares have rallied 45.1% compared with 23.2% decline recorded by the industry.
Upbeat Outlook
The company expects adjusted earnings for fiscal 2020 in the range of $9.35-$9.60 per share. This calls for a 14-17% rise year over year. It also sees adjusted earnings per share for first-quarter fiscal 2020 in the band of $2.05-$2.10, which indicates 10-13% rise year over year.
Estimates Northbound
Earnings estimate revisions have the greatest impact on stock prices. Estimates for fiscal 2020 for Air Products have moved up over the past three months. Over this period, the Zacks Consensus Estimate for the year has increased 1.2%.
Healthy Growth Prospects
Growth prospects for Air Products look encouraging. The Zacks Consensus Estimate for earnings for fiscal 2020 of $9.48 for Air Products reflects an expected year-over-year growth of 15.5%. Moreover, earnings are expected to register a 11.8% growth in the fiscal first quarter. The company also has an expected long-term earnings per share growth of 12.3%, above the industry average of 10.2%.
Shareholder Returns
Air Products remains focused on maximizing returns to shareholders leveraging strong cash flow. It generated roughly $2.7 billion of distributable cash flow during fiscal 2019. This marks an increase of nearly 20% from fiscal 2018 levels. This distributable cash flow enabled it to pay roughly $1 billion or around 40% as dividends to shareholders.
Growth Drivers in Place
Air Products’ productivity actions, investments in high-return projects and new project wins should drive its fiscal 2020 results. The company is boosting productivity to improve its cost structure. It is seeing positive impact of its productivity actions and is expected to benefit from additional productivity and cost improvement programs in fiscal 2020.
Get The News You Want
Air Products is also poised for growth on the back of its project investments. The company expects the Jazan gas and power project in Saudi Arabia to contribute to the growth in its adjusted earnings per share in fiscal 2020. The Lu'An syngas project in China is also contributing to the results in the company’s Industrial Gases – Asia segment.
The company has a total available capacity to deploy (over fiscal 2018-2022) nearly $18 billion in high-return investments, aimed at creating significant shareholder value. It has already spent or committed more than half of this capacity.
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.