Air Products and Chemicals, Inc. (APD) has been on a roll, with its stock price soaring 21.2% over the past six months. This impressive performance far outpaces both its industry’s 0.1% rise and the S&P 500’s 9.2% gain during the same period. What’s driving this surge in APD stock? Let’s delve into the key factors contributing to its success.
Air Products is reaping the rewards of its strategic investments in high-return industrial gas projects and productivity initiatives. The company’s commitment to its gasification strategy is evident in the execution of key growth projects, which are anticipated to bolster earnings and cash flow. Notably, the completion of the second phase of the Jazan project in Saudi Arabia has already begun to deliver positive results.
With a projected $30.8 billion available for high-return investments over the next decade (fiscal years 2024-2033), Air Products is well-positioned to create significant shareholder value. Simultaneously, the company is diligently pursuing productivity enhancements to optimize its cost structure. The positive impact of these efforts is already visible, and further cost improvement programs are expected to support margin expansion in the future.
In an inflationary environment, Air Products is adeptly managing pricing strategies to protect its profitability. The company’s dedication to maximizing returns for shareholders is underscored by its strong balance sheet and robust cash flows. Earlier this year, Air Products’ board increased the quarterly dividend to $1.77 per share, marking an impressive 42 consecutive years of dividend increases. The company paid out approximately $1.5 billion in dividends to shareholders in 2023 and anticipates returning roughly $1.6 billion through dividends in 2024.
Air Products’ financial performance remains solid. In the fiscal third quarter, the company’s adjusted earnings per share of $3.20 surpassed the Zacks Consensus Estimate of $3.04. Looking ahead, the company expects adjusted earnings per share in the range of $12.20-$12.50 for fiscal 2024, representing a 6-9% increase from the previous year.
While Air Products currently carries a Zacks Rank #3 (Hold), several other stocks in the Basic Materials sector warrant attention. IAMGOLD Corporation (IAG) and Eldorado Gold Corporation (EGO), both boasting a Zacks Rank #1 (Strong Buy), and Hawkins, Inc. (HWKN) with a Zacks Rank #2 (Buy), are worth considering.
IAMGOLD’s current-year earnings estimate has surged 46.4% in the past 60 days, and the company has consistently exceeded analyst expectations in recent quarters. IAG’s shares have skyrocketed roughly 153% in the past year. Eldorado Gold’s current-year earnings are projected to reach $1.40 per share, representing a substantial 145.6% year-over-year increase. EGO has consistently outperformed estimates in recent quarters, with its shares rallying approximately 83% over the past year.
Hawkins’ current fiscal-year earnings are anticipated to rise 15.3% year-over-year, reaching $4.14 per share. The consensus earnings estimate for HWKN has climbed 12.8% in the past 60 days, and the stock has surged around 106% in the past year.
