Praxair (PX) To Report Q1 Earnings: What's In The Offing?

Praxair Inc. (NYSE:PX) is scheduled to report first-quarter 2018 results on Apr 26, before the market opens.

The industrial gas producer and supplier performed well in the last four quarters. Average earnings surprise was a positive 3.00%. Notably, in the last quarter, the company’s earnings of $1.52 per share surpassed the Zacks Consensus Estimate by 2.70%.

In the last six months, the company’s shares have yielded 4.7% return, outperforming the decline of 2.8% recorded by the industry.



Let us see how things are shaping up for Praxair prior to this earnings announcement.

Factors to Affect Q1 Results

We believe that Praxair’s growth opportunities are directly correlated with industrial activities in the United States and that of the foreign nations it serves. Available data for few economic indicators clearly reflect that operating conditions were quite favorable for industrial companies in the first quarter of 2018. Industrial production grew at an annual rate of 4.5% while the ISM Purchasing Managers’ Index for March pointed toward an expanding manufacturing sector. Growing U.S. housing markets, along with expanding domestic and world economy, support growth of industrial stocks.

For the North America segment, Praxair will gain from rising demand for gases for industrial use, especially in the metals, chemicals, downstream energy and manufacturing end markets. Also, the company’s efforts to expand business in non-industrial areas will be fruitful. In this regard, long-term agreement (signed in January 2018) to supply nitrogen to EverDisplay Optronics' AMOLED (6th generation) project is worth mentioning.

The Zacks Consensus Estimate for the North America segment’s revenues stands at $1,552 million for the first quarter, above $1,542 million recorded in the previous quarter. Also, the segment’s average sales surprise for the last two quarters was a positive 2.61%.

For South America, a lot depends on the political uncertainties in Brazil that have somewhat stalled the growth prospects in the region. However, Argentina seems a decent market for the company. The Zacks Consensus Estimate for the South America segment’s revenues stands at $383 million for the first quarter, above $370 million recorded in the previous quarter.

For the Asia segment, growth in demand for gases for the use in electronics end market, especially by Chinese and Korean customers, is believed to be a boon. For the Europe segment, manufacturing and metals industries are demanding more industrial gases.

Praxair anticipates increasing its margins on the back of favorable pricing and volumes in the first quarter of 2018. Earnings are anticipated to be $1.53-$1.58 per share, reflecting year-over-year growth of 12-15%. This projection includes 5 cents of gain from the latest tax reform in the country. However, seasonal weakness, due to Carnival (LON:CCL) and Lunar New Year as well as slower activities in the U.S. Gulf Coast, might slow down the growth momentum.

Earnings Whisper

Our proven model provides some idea on the stocks that are about to release earnings results. Per the model, a stock needs to have a combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or 2 (Buy) or 3 (Hold) for an earnings beat to be likely. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case for Praxair as you will see below.

Zacks ESP: Earnings ESP for the company is currently -0.48%, as the Most Accurate estimate of $1.55 is below the Zacks Consensus Estimate of $1.56.

Praxair, Inc. Price and EPS Surprise