Air Products and Chemicals (APD): Taking Stock of Valuation After Strong Q4 Results and Upbeat 2026 Outlook

Air Products and Chemicals (APD) just released its fourth-quarter earnings, surpassing sales and adjusted earnings expectations even as it recorded substantial one-time charges. Investors responded positively as management provided optimistic guidance for fiscal 2026.

See our latest analysis for Air Products and Chemicals.

After a challenging stretch earlier in the year, Air Products and Chemicals shares have regained momentum, climbing nearly 8% in the past week as investors warmed to upbeat guidance and robust project updates. While the one-year total shareholder return remains down over 15%, the recent reversal suggests that sentiment around future growth is beginning to shift in the company’s favor.

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With Air Products now trading at a double-digit discount to analyst targets and management forecasting a profitable rebound, the key question is whether this sets up a genuine buying opportunity or if the market has already priced in next year's growth.

Most Popular Narrative: 18% Undervalued

Compared to the last closing price, the most widely followed narrative pegs Air Products and Chemicals’ fair value much higher, hinting at meaningful upside if its growth thesis holds. With this positioning top of mind, let’s look at what’s underpinning such a view.

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

Read the complete narrative.

What’s the secret sauce in the narrative math? Bold projections for both earnings and profit margins fuel this high conviction view. Readers who want to know which ambitious forecasts are stacked into this target should keep going. Some of the numbers behind the projection might surprise you.

Result: Fair Value of $315 (UNDERVALUED)

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

However, delays on major projects or persistent weakness in key demand sectors could easily derail hopes for sustained earnings growth and margin expansion.

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

Another View: Multiples Show a Different Story

Shifting from fair value to market multiples, Air Products currently trades at a price-to-sales ratio of 4.8x. This is significantly above both its fair ratio of 2.4x and the US Chemicals industry average of 1.1x. Such a premium could expose investors to downside risk if sentiment changes. Is this justified by expectations for future growth or is it based more on optimism?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Air Products and Chemicals Narrative

If you’re looking to dig deeper or trust your own instincts, you can easily build your own view from the data in just minutes. Do it your way

A great starting point for your Air Products and Chemicals research is our analysis highlighting 3 key rewards and 2 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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