APD to Buy Back $1B Shares - Analyst Blog
September 20 2011 - 4:15AM
Zacks
Air Products &
Chemicals Inc. (APD) announced the completion of its
current $1 billion share repurchase program with the repurchase of
$299 million shares this quarter. Air Products also announced that
its board authorized a new $1 billion share repurchase program.
As of August 31, 2011, Air Products
had 210 million shares outstanding.
On September 15, 2011, the board of
directors of Air Products also declared a quarterly dividend of 58
cents per share of common stock, to be payable on November 14, 2011
to shareholders of record at the close of business on October 3,
2011.
Air Products is one of 23 companies
worldwide and one of four U.S.-based firms to be named to the
Carbon Disclosure Project's (CDP) Global Disclosure and Performance
Leadership Indexes for 2011.
Effective October 01, 2011, Air
Products also plans to increase product pricing by 5 to 10% for
liquid oxygen, liquid nitrogen, liquid argon, liquid and bulk
hydrogen; and monthly service charges by 3 to 5% for merchant
customers in North America.
In July 2011, the company reported
third-quarter fiscal 2011 EPS of $1.46 versus $1.17 in the
year-earlier quarter, in line with the Zacks Consensus Estimate of
$1.46. The results exclude a 4-cent gain in discontinued operations
recognizing a tax benefit from the sale of the company's U.S.
healthcare operations in 2009.
Net sales amounted to $2.6 billion
versus $2.3 billion in the prior-year quarter, outshining the Zacks
Consensus Estimate of $2.5 billion. The improved results were
mainly driven by higher volumes in the Electronics and Performance
Materials and Tonnage Gases segments.
The company witnessed strong volume
growth across a number of businesses, mainly in the Asia Merchant
business and the energy and electronics markets. However, the U.S.
and Europe Merchant businesses witnessed slower growth.
For the quarters ahead, the company
forecasts strong revenue growth in the Tonnage and Electronics and
Performance Materials segments. The company also expects to improve
margins in the next quarter based on its actions to improve
Merchant segment performance.
Management expects fourth-quarter
EPS between $1.48 and $1.53. The company raised the full fiscal
year EPS guidance between $5.70 and $5.75 per share from $5.65 and
$5.75 previously.
Last month, the company also
announced new financial targets for the 2015 timeframe. The company
expects to deliver top-line growth of 11% to 13% per year over the
next four years, boosting its total revenue to over $15 billion in
2015. Air Products also expects to improve its operating margin to
20% and its return on capital to 15% by 2015.
Based in Pennsylvania, Air Products
benefits from a long-term take-or-pay contract, a consolidated
industry structure, a diverse customer base and sustained pricing
power. However, soaring energy and raw material costs pose a threat
to margin expansion.
In order to compensate for
escalating raw material costs, Air Products has been increasing the
price for a range of chemicals it manufactures for industrial use.
Air Products faces stiff competition from Praxair
Inc. (PX) and The Linde Group.
We currently have a Zacks #3 Rank
(short-term Hold recommendation) on the stock.
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