A Closer Look at Air Products and Chemicals (APD) Valuation Following Recent Share Price Weakness

Air Products and Chemicals (APD) shares have been on a downward trend, losing around 6% over the past month and nearly 15% in the past 3 months. Investors are watching for signs of a turnaround.

See our latest analysis for Air Products and Chemicals.

After a tough few months, Air Products and Chemicals’ recent slide continues a pattern that has been evident over the past year, with the 1-year total shareholder return at -17.8%. While the latest week showed a brief uptick, momentum has generally been fading in both the short and long term. This suggests investors remain cautious about the near-term outlook.

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The real question now, as Air Products and Chemicals slips to levels well below analyst targets, is whether the market is overlooking value or if expectations for future growth are already baked in. Could this be a buying opportunity?

Most Popular Narrative: 21.4% Undervalued

With Air Products and Chemicals closing at $254.91, the most popular narrative suggests shares should be worth $324.14. This notable gap puts the spotlight on what is driving this valuation.

Heavy investments in large-scale hydrogen, blue/green ammonia, and carbon capture projects, supported by multi-decade power and supply agreements in growth regions (such as the Middle East, Asia, and U.S. Gulf Coast), are set to come online over the next several years. These projects are expected to provide robust and stable earnings and support a trajectory of consistently higher operating margins.

Read the complete narrative.

Want to uncover what is fueling such a bold price target? The narrative hinges on rapid earnings expansion, transformative projects, and profit forecasts usually reserved for sector leaders. Curious about these aggressive assumptions? Delve in to see what numbers underpin this bullish outlook.

Result: Fair Value of $324.14 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent cost overruns or a prolonged slump in helium markets could quickly disrupt these bullish expectations for Air Products’ future growth.

Find out about the key risks to this Air Products and Chemicals narrative.

Another View: Market Valuation Gaps Remain

While some see opportunity based on future growth assumptions, our DCF model presents a slightly different perspective. With Air Products and Chemicals trading about 11% below its estimated fair value, this method still suggests shares may be undervalued. Which approach offers a clearer signal for investors?

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Air Products and Chemicals Narrative

If you want to take a different view or dig into the numbers yourself, creating your own analysis is quick and simple. Just start and see what you find. Do it your way

A great starting point for your Air Products and Chemicals research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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