Praxair (PX) is a bit like an energy company: It sells a fungible, exhaustible product used by a wide swathe of industry, pays a nice dividend, and is unlikely to face a sudden change in its business model. What makes it a stable stock, however, makes it a relative yawn for Wall Street, which values quick growth above all. They see free cash flow and stability ahead, although Praxair boasts a strong position in foreign growth markets.

Praxair is the largest industrial gas supplier in North and South America and has businesses in Asia and Europe. Praxair’s primary products in its industrial gases business are atmospheric gases (oxygen, nitrogen, argon, rare gases) and process gases (carbon dioxide, helium, hydrogen, electronic gases, specialty gases, acetylene).

The company also designs, engineers, and builds equipment that produces industrial gases for internal use and external sale. The company’s surface technologies segment, operated through Praxair Surface Technologies, Inc., supplies wear-resistant and high-temperature corrosion-resistant metallic and ceramic coatings and powders.

Praxair’s sales in 2011 were $11.25 billion. Praxair serves approximately 25 industries as diverse as healthcare and petroleum refining; computer-chip manufacturing and beverage carbonation; fiber-optics and steel making; and aerospace, chemicals and water treatment.

In 2011, 94 percent of sales were generated in four geographic segments (North America, Europe, South America and Asia) primarily from the sale of industrial gases, with the balance generated from the surface technologies segment. Approximately 63 percent of sales occurred outside the United States, the company reported.

“Praxair provides a competitive advantage to its customers by continuously developing new products and applications, which allow them to improve their productivity, energy efficiency and environmental performance,” management said in a recent filing.

Praxair has a market cap of $30.92 billion in a sector, chemicals, where the average company size is $8.59 billion. Its trailing 12-month P/E ratio is 18.68 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.65, compared to 1.37 for the sector.

Its projected earnings per share growth for the coming year is 13.7 percent, compared to a sector average of 14.59 percent.

Free cash flow

Wall Street is divided on Praxair’s prospects. Merrill Lynch and Thomson Reuters/Verus rate the stock at underperform or sell, while Citigroup Investment Research and Deutsche bank call it a buy.

Standard & Poor’s Equity Research rates the stock at neutral.

“We see a long-term rise in EPS on a secular increase in demand for industrial gases, while the scheduled start-up through 2014 of a record number of new gases plants should also contribute to revenue growth over the next few years,” said S&P analysts in a recent review of PX shares.

“With its broad customer base, PX enjoys revenues that are relatively stable for a cyclical company. We think this diversification will enable the company to generate enough free cash flow over the course of the business cycle to repurchase shares, make acquisitions and raise its dividend,” S&P analysts said. “However, with the stock recently trading about in line with our target price, we would hold, but not add to positions.”

Praxair next reports on July 25.