Earnings Preview: Praxair Inc. - Analyst Blog
October 25 2011 - 7:30AM
Zacks
Praxair Inc.(PX)
is slated to release its third quarter 2011 results on Wednesday,
October 26. The current Zacks Consensus Estimate for the third
quarter earnings per share (EPS) is $1.39, representing an
annualized growth of 14.96%.
Praxair had outperformed the Zacks
Consensus Estimate over the trailing four quarters. The average
earnings surprise was a positive 1.19%, implying that the company
has outdone the Zacks Consensus Estimate by the same magnitude over
the last four quarters.
Second Quarter
Highlights
Praxair’s second quarter results
were impressive with earnings per share of $1.38, surpassing the
Zacks Consensus Estimate by a cent and registering a year-over-year
increase of 16%. The results were in line with the higher end of
management’s guidance range of $1.33-$1.38.
Total revenue jumped 13.1% to
$2,858 million, above the Zacks Consensus Estimate of $2,793
million. Increased revenue was driven by an enhanced volume, as
sales boosted in all geographical operating areas mainly in
manufacturing, metals and chemicals. Project backlog at the end of
the quarter was $2.7 billion.
Agreement/Magnitude of
Estimate Revisions
In the last 30 days, out of about
20 analysts providing earnings per share estimates on Praxair, one
firm increased it for the third quarter 2011 and another for the
fiscal year 2012. There were some cautious firms who lowered their
estimates. There was one downward revision for the third quarter;
four for both the fiscal years 2011 and 2012.
Despite the revision, estimate for
the third quarter 2011 remained stable at $1.39, while that for the
fiscal year 2011 slipped by 2 cents to $5.46. Fiscal year 2012
earnings average estimate fell by 11 cents to $6.13 per share.
The current estimates represented
year-over-year growth of 14.96% for the third quarter, 15.15% for
the fiscal year 2011 and 12.34% for 2012.
Our Take
We believe the growth prospects of
industrial gas producers are very bright going forward, with demand
for gases expected to increase manifold due to their wide
application areas.
Despite a bleak near-term economic
outlook and lower estimate revisions by analysts, we believe the
company is all set to post good third quarter results. Management's
earnings guidance range for the quarter stands at $1.35-$1.40 per
share with Zacks Estimate nearing the high-end of the range.
The company is experiencing a high
project backlog which reached about $2.7 billion at the end of the
second quarter of fiscal 2011. Long-term contracts include the ones
with Valero to supply gases in Texas and Louisiana as well as
contract with Motiva. These contracts will start generating
revenues by 2012 or 2013.
Praxair’s nearest competitor
Air Products & Chemicals Inc.
(APD) recently reported its fourth quarter results with earnings
per share of $1.51, above the year-earlier earnings of $1.35 and in
line with the Zacks Estimate of $1.51. Banking on its strong
project backlog, the company looks forward to meeting its 2015
financial goals.
For Praxair, we currently maintain
a Neutral recommendation.
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PRAXAIR INC (PX): Free Stock Analysis Report
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