The leading industrial gas supplier, Praxair Inc. (PX) is putting in all its efforts to expand its businesses worldwide as is clearly visible from the company’s acquisition spree in the past few months.
The company, recently, entered into an agreement to acquire industrial and packaged gases business of SIBUR-Russian Tyres for undisclosed financial terms. The business includes two air separation units and a bulk and packaged gas business. Located in the Volgograd Region of the Russian Federation, the unit is well known as Volzhsky Azot. The acquisition will enable Praxair to supply gases in the steel, chemical and glass industries.
Prior to this, Praxair had acquired Texas-based Welders Industrial Supply, LLC, an independent distributor of industrial and specialty gases, welding equipment, supplies and related services. Houston-based, Texas Welders Supply Company (TWSCO), an independent gas and welding products distributor was another addition to Praxair’s portfolio in December 2011 while in October 2011, Praxair bagged Texas-based, National Alloy and Equipment, Inc.
With promising long-term prospects, Praxair covers increasing application areas for industrial gases. Extensive use of these gases is found in chemical processing, petroleum refining, metal production, fabricating, electronics and health care industries. By 2015, the company targets to achieve annual organic sales growth of 8%-12%; operating profit growth of 10%-15%, and earnings growth of 12%-18%.
The current Zacks Consensus Estimate for the first quarter of 2012 is $1.36, representing a year-over-year increase of 5.54%. Estimates for the fiscal years 2012 and 2013 are $5.85 and $6.64, reflecting annual growth of 7.67% and 13.55%, respectively.
We maintain a Neutral recommendation on Praxair. The stock currently carries a #3 Zacks Rank, implying a short-term (1-3 months) Hold rating.
