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When Air Products and Chemicals, Inc. (NYSE:APD) released its most recent earnings update (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Air Products and Chemicals has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see APD has performed.
Did APD’s recent earnings growth beat the long-term trend and the industry?
APD’s trailing twelve-month earnings (from 31 March 2019) of US$1.7b has jumped 44% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 8.5%, indicating the rate at which APD is growing has accelerated. How has it been able to do this? Well, let’s take a look at if it is solely attributable to an industry uplift, or if Air Products and Chemicals has experienced some company-specific growth.
In terms of returns from investment, Air Products and Chemicals has fallen short of achieving a 20% return on equity (ROE), recording 15% instead. However, its return on assets (ROA) of 9.1% exceeds the US Chemicals industry of 7.2%, indicating Air Products and Chemicals has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Air Products and Chemicals’s debt level, has declined over the past 3 years from 14% to 12%.
What does this mean?
Though Air Products and Chemicals’s past data is helpful, it is only one aspect of my investment thesis. While Air Products and Chemicals has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Air Products and Chemicals to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for APD’s future growth? Take a look at our free research report of analyst consensus for APD’s outlook.
- Financial Health: Are APD’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.