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).

Related Articles
  1. Stock Analysis

    Allstate: How Being Boring Earns it Billions (ALL)

    A summary of what Allstate Insurance sells and whom it sells it to including recent mergers and acquisitions that have helped boost its bottom line.
  2. Options & Futures

    Cyclical Versus Non-Cyclical Stocks

    Investing during an economic downturn simply means changing your focus. Discover the benefits of defensive stocks.
  3. Investing Basics

    How to Deduct Your Stock Losses

    Held onto a stock for too long? Selling at a loss is never ideal, but it is possible to minimize the damage. Here's how.
  4. Economics

    Is Wall Street Living in Denial?

    Will remaining calm and staying long present significant risks to your investment health?
  5. Stock Analysis

    When Will Dick's Sporting Goods Bounce Back? (DKS)

    Is DKS a bargain here?
  6. Investing News

    How AT&T Evolved into a Mobile Phone Giant

    A third of Americans use an AT&T mobile phone. How did it evolve from a state-sponsored monopoly, though antitrust and a technological revolution?
  7. Stock Analysis

    Home Depot: Can its Shares Continue Climbing?

    Home Depot has outperformed the market by a wide margin in the last 12 months. Is this sustainable?
  8. Stock Analysis

    Yelp: Can it Regain its Losses in 2016? (YELP)

    Yelp investors have had reason to be happy recently. Will the good spirits last?
  9. Stock Analysis

    Is Walmart's Rally Sustainable? (WMT)

    Walmart is enjoying a short-term rally. Is it sustainable? Is Amazon still a better bet?
  10. Stock Analysis

    GoPro's Stock: Can it Fall Much Further? (GPRO)

    As a company that primarily sells discretionary products, GoPro and its potential falls right in line with consumer trends. Is that good or bad?
  1. How do dividends affect retained earnings?

    When a company issues a cash dividend to its shareholders, the retained earnings listed on the balance sheet are reduced ... Read Full Answer >>
  2. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  3. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  4. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  5. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  6. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>

You May Also Like

Trading Center