Key Takeaways
- APD stock price grew 19% the past three months alone, outpacing the rest of the diversified chemicals industry.
- Air Products is gaining from its investments in high-return industrial gas projects and productivity actions.
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Air Products and Chemicals, Inc.’s APD shares hit a fresh 52-week high of $332.69 on Nov. 22, before retracing to close the session at $331.83.
APD stock has rallied 19% over the past three months, outperforming the Zacks Chemicals Diversified industry’s 2.4% rise. It has also topped the S&P 500’s roughly 5.6% increase over the same period.
Image Source: Zacks Investment Research
Let’s take a look into the factors that are driving APD stock.
High-return Projects & Productivity Actions Drive APD Stock
Air Products’ adjusted earnings of $3.56 per share for the fiscal fourth quarter rose 13% year over year. It also topped the Zacks Consensus Estimate of $3.44. The bottom line was driven by higher volumes and favorable pricing.
Air Products is gaining from its investments in high-return industrial gas projects and productivity measures. It 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. Air Products’ carbon-free green hydrogen joint venture (JV) project in Saudi Arabia with NEOM and ACWA Power is also on track. The JV is building the world’s largest green hydrogen facility to produce green ammonia at scale. Roughly 60% of construction work is complete and the project is expected to come on stream in end-2026.
The recently completed sale of the LNG process technology and equipment business to Honeywell for $1.81 billion also reflects Air Products' commitment to its two-pillar growth strategy. The strategy seeks to profitably grow its core industrial gases and related equipment businesses and deliver clean hydrogen at scale to decarbonize the industrial and heavy-duty transportation sectors.
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 focused on improving pricing amid an inflationary environment.
The company also remains committed to maximizing returns to shareholders leveraging strong balance sheet and cash flows. Air Products’ board, earlier this year, increased its quarterly dividend to $1.77 per share. This marked the 42nd straight year of dividend increase. APD expects to return roughly $1.6 billion to shareholders through dividends in 2024.
Air Products and Chemicals, Inc. Price and Consensus
Air Products and Chemicals, Inc. price-consensus-chart | Air Products and Chemicals, Inc. Quote
APD’s Zacks Rank & Other Key Picks
APD currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks in the Basic Materials space are DuPont de Nemours, Inc. DD, Axalta Coating Systems Ltd. AXTA and Ingevity Corporation NGVT, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for DuPont's current-year earnings has increased by 3.7% in the past 60 days. DD beat the consensus estimate in each of the last four quarters with the average surprise being 12.9%. Its shares have gained roughly 17% in the past year.
The Zacks Consensus Estimate for Axalta Coating’s current year earnings is pegged at $2.15, indicating a rise of 36.9% from year-ago levels. The consensus estimate for AXTA’s current year earnings has increased 3.9% in the past 60 days. The stock has rallied around 30% in the past year.
Ingevity beat the consensus estimate in three of the last four quarters while missed once. In this timeframe, it delivered an earnings surprise of 95.4%, on average. NGVT’s shares have gained roughly 26% in the past year.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
