Analysts are expecting a drop in profit for Praxair (NYSE:PX) when it reports its results for the third quarter on Wednesday, October 24, 2012. The company reported profit of $1.40 a year ago, but the current consensus estimate anticipates earnings per share of $1.39.

Earnings season is important to investors because it shows how much profit is left in the company's hand after deducting costs from revenue. SEE: How To Decode A Company's Earnings Reports

What to Expect: Analysts are anticipating that Praxair will report earnings of $1.39 per share, down 0.7% from a year ago, when the company reported earnings of $1.40 per share.

Whereas the consensus estimate was $1.49 three months ago, it has since fallen. For the fiscal year, analysts are expecting earnings of $5.64 per share.

Praxair's expected revenue of $2.85 billion for the quarter is below last year's reported figure of $2.9 billion by 1.6%. For the fiscal year, expected revenue is $11.37 billion.

Company Performance: Revenue fell year-over-year in the second quarter to end a three-quarter growth streak. After rising 5.1%in the first quarter, 6.6% in the fourth quarter of the last fiscal year and 14.1% in the third quarter of the last fiscal year, it fell 1.6% in the most recent quarter.

Compared to the industry average of 13.13, PX's P/E ratio of 19.3 is quite high. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. A company's price/earnings ratio (P/E ratio) provides a measure of how expensive or cheap a stock is. A high or low P/E ratio is not good or bad in and of itself, but a company trading with a high P/E ratio must continue to post strong financial performance or its stock price is likely to fall. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Over the past quarter, the stock price has increased from $106.28 on July 23, 2012 to $107.97. Praxair's best recent streak was when its price gained $3.95 per share between August 28, 2012 and September 20, 2012.

The Competition: Praxair produces and sells atmospheric, process and specialty gases, and high-performance surface coatings to industrial clients. Analysts are optimistic about Praxair, with nine of 16 assigning it a buy rating. This marks an improvement, as the average rating has changed to moderate buy from hold in the past three months.

The company's closest competitor in the chemical manufacturing industry is Air Prods & Chems (APD).