Air Products Up 20% in 6 Months: What's Driving the Stock?

Air Products and Chemicals, Inc.'s APD shares have popped 19.9% over the past six months. The company has also outperformed its industry's rise of 4.1% over the same time frame. APD has also topped the S&P 500's roughly 11.2% rise over the same period.

Let's take a look into the factors that are driving this Zacks Rank #3 (Hold) stock.

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What's Going in APD's Favor?

Forecast-topping earnings performance in the fiscal third quarter and upbeat prospects have contributed to the rally in the company's shares. Air Products' earnings from continuing operations for the third quarter rose to $3.13 per share from $2.67 in the year-ago quarter.

Adjusted earnings per share of $3.20 topped the Zacks Consensus Estimate of $3.04. APD continues to expect fiscal 2024 adjusted earnings per share of $12.20-$12.50, suggesting a 6-9% increase from the previous year.

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. The company has a total available capacity to deploy (over fiscal 2024-2033) $30.8 billion in high-return investments aimed at creating significant shareholder value.

APD 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 will likely support its margins. The company also remains focused on improving pricing amid an inflationary environment.

The company remains committed to maximizing returns to shareholders leveraging strong cash flows. Air Products' board, in January 2024, increased its quarterly dividend to $1.77 per share. This marked the 42nd straight year of dividend increase. The company paid roughly $1.5 billion in dividends to shareholders in 2023. APD expects to return roughly $1.6 billion to shareholders through dividends in 2024.

Stocks to Consider

Better-ranked stocks in the Basic Materials space are Newmont Corporation NEM, Element Solutions Inc ESI and Eldorado Gold Corporation EGO, each sporting a Zacks Rank #1 (Strong Buy).

The Zacks Consensus Estimate for Newmont's current-year earnings is pegged at $2.82, indicating a rise of 75.2% from year-ago levels. The Zacks Consensus Estimate for NEM's earnings has increased 16% in the past 60 days. The stock has rallied around 34% in the past year.

The consensus estimate for Element Solutions' current-year earnings has increased by 0.7% in the past 60 days. ESI beat the consensus estimate in three of the last four quarters while delivering in-line results on the other occasion. In this timeframe, it delivered an earnings surprise of around 3.8%, on average.

The Zacks Consensus Estimate for Eldorado Gold's current-year earnings is pegged at $1.35 per share, indicating a year-over-year rise of 136.8%. EGO beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 430.3%. The company's shares have rallied roughly 93% in the past year.

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