Airgas Inc. (ARG) has entered into a three-year supply agreement with Texas-based TDIndustries, a leading mechanical construction and facilities operations services provider. Under the agreement, Airgas will supply industrial gases, and welding and safety products, as well as leased safety equipment and leased welding equipment, welder certification trailers, generators, and compressors to the company.
The Airgas-TDIndustries association is already well entrenched. Airgas has been serving a few of TDIndustries locations in the local Houston and Dallas markets. The Airgas construction group, Oilind Safety, Red-D-Arc Welderentals and several Airgas regional companies are currently working with TDIndustries to serve the latter’s job sites throughout the U.S.
Airgas delivered an adjusted EPS of 80 cents in its third quarter fiscal 2011 ended December 31, 2010, a growth of 23% from 65 cents in the year-ago quarter and a penny ahead of the Zacks Consensus Estimate. EPS in the quarter was also at the high end of Airgas’ third quarter earnings guidance range of 76 cents to 80 cents per share ascribed to solid revenue growth and effective cost management.
Management expects fourth quarter EPS in the range of 82 cents to 86 cents, reflecting a year-over-year growth of 19% to 25% from the year-ago EPS of 69 cents. For full year 2011, management projects EPS in the range of $3.28 to $3.32, up from the previous expectation of $3.22 to $3.32. The Zacks Consensus Estimates for the fourth quarter and fiscal 2011 currently stand at 85 cents and $3.31, respectively.
We believe Airgas’ strong market position, growth opportunities, well-known brand identity, size and scale advantage, extensive U.S. distribution network, and product/service offering, diverse customer base and a multifaceted growth formula will favor the company in the years ahead. We currently have a Zacks #2 Rank (short-term Buy recommendation) on the stock.
Pennsylvania-based Airgas and its subsidiaries collectively distribute industrial, medical, and specialty gases that are delivered in packaged or cylinder form, along with welding, safety, and related products, such as hard goods, in the United States. Airgas also produces dry ice, liquid carbon dioxide, nitrous oxide, process chemicals, and other specialty gases for distribution throughout the United States. Airgas competes with Air Products (APD) and L’Air Liquide SA.
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