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Can APD Keep Up its Upward Revenue Trend?

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APD’s fourth-quarter revenue estimates

Air Products and Chemicals (APD) is expected to report revenues of $2.31 billion in the fourth quarter of the fiscal year, which represents a ~4.9% increase from to the fourth quarter of 2017, when it reported revenues of $2.20 billion. Can APD keep up its upward trend for the fourth quarter?

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Driving factors

The projected revenue growth for the fourth quarter is driven by expected higher volumes and higher price realizations. APD has bagged several new orders, creating a healthy backlog, which is expected to drive revenue. APD has also increased prices for several industrial gases across different regions, which is also expected to increase revenue. The Lu’an gasification process and the completion of the acquisition of Shell’s coal gasification technology could be other factors that drive APD’s revenue.

However, the company’s revenue growth is expected to see an adverse impact from unfavorable foreign currency. The dollar index has risen 5.7% over the past six months.

The Materials Select Sector SPDR Fund (XLB) has invested 5.4% of its portfolio in Air Products and Chemicals. The fund also provides exposure to DowDuPont (DWDP), Praxair (PX), and Sherwin-Williams (SHW) with weights of 29.6%, 17.3%, and 7.0%, respectively, as of November 1.

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