Stock Analysis

Here's Why Air Products and Chemicals (NYSE:APD) Has Caught The Eye Of Investors

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It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss-making companies are always racing against time to reach financial sustainability, so investors in these companies may be taking on more risk than they should.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Air Products and Chemicals (NYSE:APD). Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Air Products and Chemicals with the means to add long-term value to shareholders.

View our latest analysis for Air Products and Chemicals

How Quickly Is Air Products and Chemicals Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, Air Products and Chemicals has grown EPS by 5.9% per year. That might not be particularly high growth, but it does show that per-share earnings are moving steadily in the right direction.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. While we note Air Products and Chemicals achieved similar EBIT margins to last year, revenue grew by a solid 18% to US$13b. That's progress.

You can take a look at the company's revenue and earnings growth trend, in the chart below. To see the actual numbers, click on the chart.

NYSE:APD Earnings and Revenue History March 26th 2023

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Air Products and Chemicals' forecast profits?

Are Air Products and Chemicals Insiders Aligned With All Shareholders?

Owing to the size of Air Products and Chemicals, we wouldn't expect insiders to hold a significant proportion of the company. But we are reassured by the fact they have invested in the company. Indeed, they have a considerable amount of wealth invested in it, currently valued at US$197m. While that is a lot of skin in the game, we note this holding only totals to 0.3% of the business, which is a result of the company being so large. This still shows shareholders there is a degree of alignment between management and themselves.

Does Air Products and Chemicals Deserve A Spot On Your Watchlist?

As previously touched on, Air Products and Chemicals is a growing business, which is encouraging. If that's not enough on its own, there is also the rather notable levels of insider ownership. These two factors are a huge highlight for the company which should be a strong contender your watchlists. You should always think about risks though. Case in point, we've spotted 1 warning sign for Air Products and Chemicals you should be aware of.

There's always the possibility of doing well buying stocks that are not growing earnings and do not have insiders buying shares. But for those who consider these important metrics, we encourage you to check out companies that do have those features. You can access a free list of them here.

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

What are the risks and opportunities for Air Products and Chemicals?

Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and related services in the Americas, Asia, Europe, the Middle East, India, and internationally.

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  • Trading at 31.6% below our estimate of its fair value

  • Earnings are forecast to grow 14.4% per year


  • Has a high level of debt

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