Airgas, Inc. a Nice GARP Stock for Value InvestorsVW Staff
Airgas, Inc. (NYSE:ARG) is a Pensylvania based company that was founded in 1982. It is engaged in the distribution of industrial, medical, and specialty gases in the United States. The company offers a complete range of gas products that fulfills the customers demand including nitrogen, oxygen, argon, helium, hydrogen, welding, and fuel gases, ultra high purity grades, special application blends, and process chemicals. The company is also involved in the rental of gas cylinders, cryogenic liquid containers, bulk storage tanks, tube trailers, and welding and welding related equipment; and distribution of hard goods consisting of welding consumables and equipment, safety products, and construction supplies, as well as maintenance, repair, and operating supplies. In addition, it offers liquid carbon dioxide, dry ice, ammonia, and refrigerants, as well as atmospheric merchant gases. The company’s integrated distribution network consists of branch locations, distribution centers, and outbound telemarketing operations.
As of Monday 24th September 2012, the stock for Airgas, Inc. (NYSE:ARG) closed at USD 83.88 representing a market capitalization of approximately USD 6.46 billion. The stock has registered an average volume of 527,808 shares over the last three months. The stock has a trailing P/E ratio of 19.91, a P/S ratio of 1.34 and a P/B ratio of 3.52.
Praxair Inc ; another company involved in the gas manufacturing industry has a P/E ratio of 19.32, P/S ratio of 2.81 and P/B ratio of 5.68
The net sales for the company in quarter ending 30th June 2012 were USD 1.3 billion which is higher than the net sales for the same quarter last year (USD 1.2 billion) by 8%. Of these sales, acquisitions net of divestures contributed 1% sales growth in the current quarter. Same-Store Sales for the company increased by 7% driven by 3% increase in sales volume and 4% growth in prices. The increase in sales
volume is reflective of the company’s strength in its manufacturing, petrochemical and energy customer base despite moderating business trends and serious shortages in helium supply; whereas growth in prices reflects a broad- based price increase on gas and rent to offset rising costs and supporting ongoing investment in production and distribution capabilities to meet customer demands.
The consolidated gross profit margin of the company was registered at 54.8% during 1QFY2013 compared with 54.4% during 1QFY2012. The major reasons for this trend included margin improvement on industrial gasses, refrigerant gases and ammonia products.
The company achieved net earnings of USD 90.8 million in 1QFY2013 compared to USD 74.9 million for 1QFY2012. The diluted earnings per share of the company were recorded at USD 1.15 per share compared to USD 0.94 per share for the same period last year representing an overall growth of 22% YOY. Lower volumes of helium sales driven by supply shortages reduced diluted earnings per share by USD 0.04 in the current quarter compared to the corresponding period last year.
Cash & Capital
The company had total cash of USD 54.90 million as of 30th June’ 2012; which represented cash value of USD 0.71 per share. The company also had total debt of USD 2.18 billion as at 30th June’ 2012 which equates to a debt to equity of 118.58.
Value Investors should watch out for this stock due to the following factors:
* The expected rebound in global economy will help sustain the growth in sales and earnings per share achieved by Airgas, Inc. (NYSE:ARG)
* The stock has a strong dividend history with 5 year average dividend yield of 1.50% and a payout ratio of 32%.
* The company has recently announced plans to build a new air separation plant in Chicago area which will produce more than 40,000 tons of oxygen, argon and nitrogen