What's In The Cards For Praxair (PX) This Earnings Season?

Industrial gas producer and supplier Praxair Inc. (NYSE:PX) is scheduled to report first-quarter 2017 results on Apr 27, before the market opens.

Over the last three months, the company’s shares yielded 2.87% return, outperforming the gain of 0.55% recorded by the Zacks categorized Chemicals-Diversified industry.

The company posted better-than-expected results in three of the last four quarters while recording in-line results in one. Average earnings surprise was a positive 1.32%. Let us see how things are shaping up for Praxair prior to this earnings announcement.

What’s Driving Q1 Results?

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 to-be-reported quarter. In the first quarter, the company signed a long-term contract with Marathon Petroleum (NYSE:MPC) to supply hydrogen to the latter’s refinery in Garyville, LA. It also started operating new air separation plants at Samsung Electronics (KS:005930) Co., Ltd’s Hwasung site and at its Burns Harbor, IN, pipeline system.

The company won a 10-year contract to provide its Tribomet™ abrasive coatings to the Indiana-based aerospace producer, Rolls-Royce (LON:RR). It inked a 15-year agreement with Celanese Corporation for supplying oxygen, carbon monoxide and nitrogen in the U.S. Gulf Coast. Also, it signed a long-term deal with Dow for supplying nitrogen to its chemical production facility.

We believe such expansionary initiatives will help Praxair meet the earnings guidance of $1.28–$1.35 per share for the quarter. Also, increasing application of industrial gases in manufacturing, transportation, healthcare, food & beverages, and metal fabrication industries will might further boost the company’s results.

However, exposure to risks arising from higher production costs, stiff competition, and high-debt levels might have restricted Praxair’s growth momentum in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Praxair will be able to pull an earnings surprise this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat earnings. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

That is not the case here as you will see below.

Zacks ESP: Earnings ESP is currently 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.33.

Zacks Rank: Praxair has a Zacks Rank #2 which increases the predictive power of ESP. However, a 0.00% ESP makes surprise prediction difficult.

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

Stocks to Consider

Here are some companies you may want to consider in the chemical industry as our model shows they have the right combination of elements to post an earnings beat this quarter:

Methanex Corporation (NASDAQ:MEOH) , with an Earnings ESP of +13.04% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Chemours Company (NYSE:CC) , with an Earnings ESP of +4.08% and a Zacks Rank #1.

Air Products and Chemicals, Inc. (NYSE:APD) , with an Earnings ESP of +1.45% and a Zacks Rank #2.

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>