Yahoo Finance Praxair's (PX) Fundamentals Solid, Runs Near-Term Risks
We issued an updated research report on industrial gas producer and supplier, Praxair Inc. PX on Jan 20, 2017. The company, with a $33.1 billion market capitalization, specializes in producing and distribution of industrial gases, including atmospheric and process gases. It also provides related services worldwide.
After the release of third-quarter 2016 results on Oct 27, shares of Praxair yielded a negative return of 0.39%, underperforming the positive return of 8.99% by the Zacks categorized Chemicals diversified industry.
In addition, we believe that Praxair’s exposure to risks arising from higher production costs, stiff competition, and high debt levels might adversely impact its financials in the near term. In the third quarter, the company’s debt-to-capital ratio was 62%. Also, it faces risks from geopolitical issues in foreign end markets and from unfavorable movements in foreign currencies. For 2016 (results not yet released), the company predicts unfavorable foreign currency movements to adversely impact earnings by 3%, while predicts manufacturing and metal volumes to be weak.
Despite these negative aspects, we believe that Praxair is well positioned to leverage benefits from its diversified product portfolio, a large client base and organic and inorganic growth strategies in the long term. In Jan 2017, Praxair started operating a new air separation plant at Samsung Electronics Co., Ltd’s Hwasung site while in December, the company started operating a new carbon dioxide purification and liquefaction plant at the Delaware refinery. In Oct 2016, the company expanded its on-site business for wastewater customers in China, signed a long-term contract with MEGlobal to supply oxygen and nitrogen to the latter’s new ethylene glycol plant and formed a joint venture with GE Aviation to work on specialized coatings.
By 2017, Praxair aims to achieve a high single-digit sales growth rate, including 2−3% contribution from base volume growth, 1−2% from price, 3−4% from projects and 1% from acquisitions.
Praxair Inc. currently carries a Zacks Rank #3 (Hold). Over the last 60 days, the Zacks Consensus Estimate on the stock decreased 1.2% to $5.88 per share for 2017.
Praxair Inc. Price and Consensus
Praxair Inc. Price and Consensus | Praxair Inc. Quote
Some better-ranked stocks in the chemical industry include BASF SE BASFY, Kronos Worldwide, Inc. KRO and Methanex Corporation MEOH. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
BASF SE has a positive average earnings surprise of 34.34% for the last four quarters. Also, earnings expectations for 2017 have improved over the past 60 days.
Kronos Worldwide, Inc.’s financial performance has been impressive in the last quarter, with a positive earnings surprise of 111.11%. Also, the stock’s earnings estimates for 2017 have been revised upward over the last 60 days.
Methanex Corporation has witnessed positive revisions in earnings estimates for 2017, over the past 60 days. Also, the company posted a positive earnings surprise of 42.86% in the last quarter.
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