How Analysts View APD’s Fiscal 3Q17 Adjusted Earnings

On March 31, 2017, APD was left with $485.3 million from its share repurchase program.

Peter Neil - Author

Jul. 27 2017, Updated 10:39 a.m. ET

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Air Products and Chemicals’ earnings estimate for 3Q17

Analysts expect Air Products and Chemicals (APD) to post adjusted EPS (earnings per share) of $1.59 in fiscal 3Q17, a decline of 17.2% on a year-over-year basis. APD had reported adjusted EPS of $1.92 in fiscal 3Q16.

The decline in APD’s adjusted EPS is primarily driven by the spin-off of its Electronic Materials division and the sale of its Performance Materials division. Excluding these changes, APD’s adjusted EPS could benefit from the decline in the cost of goods sold.

Analysts expect APD to post ~$1.4 billion in its cost of goods sold in fiscal 3Q17, representing 66.7% of its expected sales. In fiscal 3Q16, APD reported ~$1.6 billion in the cost of goods sold, representing 67.3% of its revenues. This implies a reduction of 60 basis points over 3Q16.

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APD’s plan for share repurchases in fiscal 3Q17

Air Products and Chemicals (APD) can boost its earnings per share by repurchasing its common shares from the open market. APD’s board of directors authorized a $1.0 billion share repurchase program. However, APD did not make any share buybacks in fiscal 2Q16.

On March 31, 2017, APD was left with $485.3 million from its share repurchase program. It needs to be seen whether APD will make any share repurchases to boost its earnings per share.

Investors can indirectly hold APD by investing in the Vanguard Materials ETF (VAW), which invests 3.6% in APD. The top holdings of the fund include Dow Chemical (DOW), DuPont (DD), and Monsanto (MON), which had weights of 9.3%, 8.5%, and 5.9%, respectively, on July 25, 2017.

In the next part, we’ll look into APD’s latest analyst recommendations.


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