Company Description
Praxair, Inc. is the largest industrial gases company in North
and South America, and one of the largest worldwide, with 2002
sales of $5.1 billion. The company produces, sells and
distributes atmospheric and process gases, and high-performance
surface coatings. Praxair products, services and technology bring
productivity and environmental benefits to a wide variety of
industries, including aerospace, chemical, electronics, energy,
food and beverage, healthcare, manufacturing, metals and others.
For more information, visit Praxair on the Internet at
www.praxair.com
[Source: Company Press Release]
Reasons to Invest:
This Week's Drip of the Week is Praxair Inc (NYSE:PX). Praxair just announced and beat earning for the third quarter of 2003.
Several companies are meeting estimates for the Q3 and a few are
beating them, but Praxair beat last years Q3 earnings by $0.11.
This, coupled with an increase in net income, sales, and
profitability is why we are spotlighting PX as this week's Drip
of the Week.
A Look at the Figures
Praxair's earnings came in at $0.91 cents per share, which in
$0.01 higher than analysts estimates of $0.90. On top of that,
their net income rose to $150 million which when compared to last
years third quarter net income of $131 million is impressive to
say the least (especially in an economy as unpredictable as
this). Sales of PX rose 9 percent to $1.41 billion compared to
$1.29 billion just a year ago. Operation profits rose by 5
million to $240 million for the third quarter.
Regional Sales
In respects with regional growth, sales grew eleven percent in
Europe to $168 million. In North America sales rose nine percent
to 918 million. The company reported 21 percent sales growth in
South America to $187 million and in Asia sales rose 23 percent
to $103 million. Most of the sales growth in Asia was catered to
an increase in sales in China.
I suppose you might feel that the largest industrial gas company
in North and South America should be showing greater numbers with
each passing quarter but this is not the case for all Chemcial
suppliers - take for instance PX's competitor Air Products and
Chemicals Inc (NYSE: APD) which came in a penny under Wall
Street's expectations. Not to mention their sales fell 9 percent
on the quarter, further proving that PX's strength in the third
quarter makes it a healthy and attractive Chemical Index (DJUSCH)
Drip candidate for your portfolios.
Dividend Information and Increase
PX yields a descent dividend of 1.54 percent, which comes out to
an annual dividend of 1.08 per share per year. The company
announced on Wednesday (10/29/03) that they were increasing their
dividend by 25 percent, which is reflected in their yearly
dividend price of $1.08. Shareholders on record as of December
5th, 2003 will catch the benefits of this dividend increase on
December 15th - the new dividend payable date.
The company reported that this increase in dividend is a
reflection of their substantial improvement in operating cash
flow achieved by their company over the last several years.
Furthermore, the strength in the company's balance sheet and
credit rating helped to provide the justification for this
dividend increase.
Now I know personally that a dividend increase could only mean
more payouts and possibility for further profit for my portfolio,
but what is even more exciting about this drip is that they have
increased their dividend every year for the past ten years since
being listed on the NYSE. Moreover, this is the second dividend
increase for PX this year alone.
Stock Split Announcement
While we Drip Investors are not playing stocks based upon
companies announcing stock splits, PX announced a 2-for-1 stock
split in the same report in which they noted their dividend
increase. The payable date for the stock split is set for
December 15th, 2003 to shareholders on record December 5th.
Drip investors should note that this is the same payable date and
distribution date as the new dividend price; however, the
dividend is based upon a pre-split basis. Unlike the annual
dividend increase for PX, this is the first stock split for PX
since being listed in 1992.
The company said they are splitting their stock in order to lower
the price and attract new investors. This is almost reason
enough to get invested now as you will own twice the stock come
December 15th, and receive twice the dividend, as noted on a pre-
split basis.
Performance History
Over the past 52-weeks PX's price change has been +28.61 percent,
which is not shabby for a stock in the Chemical Industry. In
relation to the 52-week change for PX when compared to the S&P
500 their price change was +8.81 percent. On October 30th, 2003
Praxair hit a new all time high of 70.61, over 20 points higher
than their 52-week low of 50.03 (3/12/03).
Praxair's dividend percentage growth rate for the next year is
estimated to be 11.77 percent. Over the next three years the
company is expecting this percentage to be around 10.72 percent,
and over the course of five years it is predicted to be around
11.55 percent.
According to MultexInvestor.com (now a part of Yahoo!) their risk
alert summary for PX is very attractive. Multex is actually
reporting that there is no risk in new entries of PX's stock.
Praxair passed all of the six tests, which measure the
possibility for risk in individual stocks. The passing grades in
which they received were for estimate revisions, analyst
recommendations, institutional selling, shorted shares, price
deterioration and price momentum.
From what I gather this risk alert summary measures if people are
becoming less enthusiastic about any given stock, apparently PX
is not one of those stocks, which in my opinion is good to know.
The last thing I would like to note about PX is that over the
past three months, analyst recommendations for the stock have
been increasingly more bullish. There was one analyst
recommending a strong sell for the company for the past three
months, but this analysts has upgraded their recommendation from
Strong Sell to Sell. While having a sell rating is not
necessarily a good indication to jump into a stock, another
analyst added PX to their strong buy list this month, and two
others added PX to their buy list. With that said, I always try
and weigh the good with the bad and then balance the two out,
sort of - so to speak - making this chemical imbalance, well...
balanced (Big Grin).
This ends another exciting episode of the DripAdvisor.com Drip of
the Week. Stay tuned next week, as we will spotlight another
stock worthy of the DripAdvisor.com limelight.
Have a Great Halloween!
Until Next Week,
Nich Sheldon
Editor
Broker Recommendations
Strong Buy 3
Buy 5
Hold 4
Sell 1
Strong Sell 0
Brokers Covering 13
DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = No
Accept Foreign Accounts: Yes
Temper Enrollment: Yes
Min/Max Investment = $50-$24,000/Year
Reinvestment Fees -
Dividend investment fees: None
Cash investment fees: None
Auto reinvestment fees: None Available
Transfer Agent:
Bank of New York
800-632-0140
Corporate Headquarters:
39 Old Ridgebury Road
Danbury, CT 06810
Phone: (203) 837-2000
Fax: (203) 837-2001
