Air Products (APD) To Post Q2 Earnings: What's In The Cards?

Air Products and Chemicals, Inc. (NYSE:APD) is slated to release second-quarter fiscal 2019 results on Apr 24, before market opens.

Air Products’ strategic investments in high-return projects and productivity initiatives are likely to drive the upcoming quarterly results. However, lower activity from the Jazan project in Saudi Arabia is expected to affect results in the Global segment.

The stock has gained 19.3% in a year’s time, against the industry’s 21% decline.

Few of the Factors at Play

Air Products’ investments in high-return projects, business deals and acquisitions are expected to drive results in fiscal 2019. The company’s productivity and pricing actions are expected to support margins in the to-be-reported quarter. Also, the Lu'An project is likely to continue driving volumes in the Asia business. However, lower activity from the Jazan is a concern in the fiscal second quarter, which is denting the performance of the Global segment.

What Do the Estimates Say?

Air Products expects second-quarter adjusted earnings per share (EPS) in the band of $1.80-$1.90. The midpoint of this range indicates an 8% rise from the year ago reported number.

The Zacks Consensus Estimate for revenues is currently pegged at $2,199 million, suggesting a rise of nearly 2% year over year.

The Zacks Consensus Estimate for the Industrial Gases — Americas segment revenues is currently pegged at $955 million, calling for an increase of 4.6% year over year. The consensus mark for the segment’s operating income is pegged at $232 million, indicating growth of 4.5% year over year. Higher volumes and pricing are working in favor of the segment.

The Zacks Consensus Estimate for revenues in the Industrial Gases — Asia segment is pegged at $659 million, implying an 18.1% rise year over year. Operating income in the segment is projected at $198 million, reflecting a year-over-year increase of 32.9%. Contributions from the Lu'An gasification project are supporting margins in the segment.

The Zacks Consensus Estimate for revenues in the Industrial Gases — EMEA segment is projected at $542 million, reflecting a decline of 3.6% year over year. The Zacks Consensus Estimate for operating margin is pegged at $116 million, which indicates a dip of roughly 1% year over year.

The consensus mark for revenues in the Industrial Gases — Global segment is pegged at $72 million, which shows a decline of 29.4% year over year. The consensus mark for the segment’s operating income is pegged at $6.04 million, which indicates a plunge of 50% year over year. Lower activity from the Jazan project is impacting performance in the segment.

Zacks Model

Our proven model does not show that Air Products is likely to beat estimates this quarter. That is because a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below:

Earnings ESP: Earnings ESP for Air Products is -1.44%. The Most Accurate Estimate is at $1.85 and the Zacks Consensus Estimate is pegged at $1.88. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Air Products currently carries a Zacks Rank #3, which when combined with a negative ESP, makes surprise prediction difficult. You can see the complete list of today’s Zacks #1 Rank stocks here.

Note that we caution against stocks with a Zacks Rank #4 (Sell) or #5 (Strong Sell) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Poised to Beat Estimates

Here are some companies in the same space you may want to consider as our model shows that they also have the right combination of elements to beat estimates.

Kinross Gold Corporation (NYSE:KGC) has an Earnings ESP of +9.09% and carries a Zacks Rank #3.

Ingevity Corporation (NYSE:NGVT) has an Earnings ESP of +6.77% and carries a Zacks Rank #3.

Ternium S.A. (NYSE:TX) has an Earnings ESP of +6.21% and carries a Zacks Rank #3.

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