APD Air Products and Chemicals Inc

Praxair Inc.(PX) is slated to release its fourth quarter and fiscal year 2011 results on Wednesday, January 25. The current Zacks Consensus Estimates for the fourth quarter and fiscal year 2011 earnings per share (EPS) are $1.37 and $5.44, representing  annualized growth of 9.31% and 14.74%, respectively.

Praxair had outperformed the Zacks Consensus Estimate over the trailing four quarters. The average earnings surprise was a positive 1.16%, implying that the company has outdone the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Third Quarter Highlights

Praxair's third quarter results were impressive with earnings per share of $1.40 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 $1.35-$1.40.

Total revenue jumped 14.1% to $2,896 million, above the Zacks Consensus Estimate of $2,838 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 16 analysts providing earnings per share estimates on Praxair, two firms increased their estimates for the fiscal year 2012 while one decreased its estimate. There were no revisions for the fourth quarter and fiscal year 2011 estimates.

Estimates for the fourth quarter and the fiscal year 2011 stood stable at $1.37 and $5.44 per share. Fiscal year 2012 estimate went up by 5 cents to $5.98, representing a year- over-year growth of 10.01%.

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. Praxair's high project backlog and long-term contracts are also very encouraging. However, management's outlook for the fourth quarter and lowered guidance for the fiscal year 2011 raise causes of concern.

Praxair's nearest competitor Air Products & Chemicals Inc. (APD) will release its first quarter 2012 earnings results on January 24, 2012. Estimate for the quarter stands at $1.35, up 0.32% year over year while for fiscal years 2012 and 2013 at $5.97 and $6.73, respectively.

For Praxair, we currently maintain a Neutral recommendation.

 
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