Yahoo Finance Here's Why You Should Hold Onto Air Products (APD) for Now
Air Products and Chemicals, Inc. APD is expected to benefit from its project investments, productivity actions and new business deals. However, unfavorable currency translation and the slowdown in Europe and China are concerns.
The company’s shares are up 18.4% over a year, compared with a 4.7% rise 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 well-placed to gain 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) $31.8 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 more than $1.5 billion in dividends to shareholders in 2023.
Unfavorable Currency, Slowdown in Europe & China Ail
Air Products faces headwinds from unfavorable currency swings. The company saw currency headwinds in its Asia segment in the fiscal third quarter due to the weakening of Asian currencies vis-à-vis the U.S. dollar, which reduced its sales and EBITDA for the unit by 5% in the quarter. It is likely to face continued currency headwinds in the fiscal fourth quarter.
The slowdown in China and Europe may also affect the company’s business in these regions. The cooling China economy might impact volumes in the Industrial Gases - Asia segment. Air Products is also seeing weak demand for merchant products in Europe. The lack of growth in industrial output in Europe is another concern.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote
Zacks Rank & Key Picks
Air Products currently has a Zacks Rank #3 (Hold).
Better-ranked stocks worth a look in the basic materials space include Carpenter Technology Corporation CRS, Hawkins, Inc. HWKN and Alamos Gold Inc. AGI.
The Zacks Consensus Estimate for current fiscal-year earnings for CRS is currently pegged at $3.48, implying year-over-year growth of 205.3%. Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has a trailing four-quarter earnings surprise of roughly 10%, on average. The stock has rallied around 75% in a year.
Hawkins currently carrying a Zacks Rank #1. It has a projected earnings growth rate of 18.9% for the current year.
Hawkins has a trailing four-quarter earnings surprise of roughly 25.6%, on average. HWKN shares are up around 45% in a year.
Alamos Gold currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for AGI's current-year earnings has been revised 13.2% upward over the past 60 days.
The Zacks Consensus Estimate for current fiscal-year earnings for Alamos Gold is currently pegged at 43 cents, implying year-over-year growth of 53.6%. AGI shares have gained around 61% in a year.
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Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
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