Praxair (PX) Hikes Gas Prices to Counter Higher Expenses - Analyst Blog

Industrial gas producer and supplier, Praxair Inc. (PX), recently hiked the prices of industrial, specialty and medical gases for its bulk gas customers in the U.S., Canada and Puerto Rico. The revised prices will be effective from Jan 1, 2015.

As communicated, prices of nitrogen, oxygen and carbon dioxide have been increased up to 10%, while that of argon, hydrogen and helium have seen a 15% rise. Also, the company increased facility fees or other monthly supply system charges by roughly 10%. Hardgoods prices were hiked by 5%.

Praxair cited higher raw material, production and distribution costs as the primary reason behind this revision.

Only two months prior in October, Praxair had hiked the prices of nitrogen, oxygen, argon, hydrogen and carbon dioxide by up to 10% for its bulk gas customers in the U.S.

We believe Praxair's profitability is highly dependent on costs of sales and expenses, as any unwarranted increase in these will lower the profitability and vice versa. In the nine months ended Sep 2014, the company recorded increases of 4.5% and 9.8% in cost of sales and interest expenses, respectively.

The Zacks Consensus Estimate for Praxair is currently pegged at $1.57 for the fourth quarter of 2014, $6.28 for 2014 and $6.83 for 2015. These estimates represent year-over-year growth of 1.6% for the fourth quarter, 5.9% for 2014 and 8.9% for 2015.

With a market capitalization of $35.9 billion, Praxair currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the industry include Innospec Inc. (IOSP), Valhi, Inc. (VHI) and Trecora Resources (TREC). While both Innospec and Valhi sport a Zacks Rank #1 (Strong Buy), Trecora Resources carries a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
PRAXAIR INC (PX): Free Stock Analysis Report
 
VALHI INC (VHI): Get Free Report
 
INNOSPEC INC (IOSP): Free Stock Analysis Report
 
TRECORA RESRCS (TREC): Get Free Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research