| Snowflake Score | |
|---|---|
| Valuation | 3/6 |
| Future Growth | 2/6 |
| Past Performance | 3/6 |
| Financial Health | 4/6 |
| Dividends | 4/6 |
APD Stock Overview
Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and services worldwide.
Air Products and Chemicals Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$268.00 |
| 52 Week High | US$316.39 |
| 52 Week Low | US$216.24 |
| Beta | 0.82 |
| 1 Month Change | 19.88% |
| 3 Month Change | 14.42% |
| 1 Year Change | -1.53% |
| 3 Year Change | 17.22% |
| 5 Year Change | 84.62% |
| Change since IPO | 2,065.66% |
Recent News & Updates
Here's Why Air Products and Chemicals (NYSE:APD) Has Caught The Eye Of Investors
It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story...
Air Products and Chemicals: We Reaffirm Our Valuation
Quarterly performances were not great but well expected by the market. Air Products and Chemicals is increasing its CAPEX investments. The outlook was maintained and so is our valuation. After Air Liquide S.A. (OTCPK:AIQUF, OTCPK:AIQUY), the American competitor Air Products and Chemicals (APD) reported its three-month accounts. As usual, APD seems more inclined to share new project developments and as we mentioned last time, Air Products is currently building: the largest blue hydrogen project located in Alberta (Canada), the largest blue ammonia project ubicated in Louisiana ((USA)); the largest and the world's most advanced Sustainable Aviation Fuel facility located in California ((USA)); the largest green hydrogen project called NEOM located in the Saudi Arabia peninsula. On top of that, the company is now allocating more than $4 billion more to additional CAPEX investments maintaining unchanged its shareholder's remunerations policy and its credit ratings (A/A2). According to the latest rumors, future projects include a green hydrogen facility in Oman (very similar to NEOM) and there is some indication to build a facility also in the European continent (mainly in the Netherlands but also in the UK). During the quarter, Air Products and Chemicals also announced a supply agreement with "the Indian Oil Corporation Limited to build, own and operate a new industrial gases complex supplying hydrogen, nitrogen and steam to IOCL’s Barauni Refinery in Bihar (India) in 2024". Last time, in our buy case recap, we explicitly said that Air Products and Chemicals has additional room to build new projects while increasing shareholder returns. Air Products and Chemicals additional CAPEX Source: Air Products and Chemicals Q3 results Q3 results All in all and in abs value, EBITDA grew by 11% compared to last year's quarter and was supported by a plus 5% in volume. Air Products and Chemicals Q3 results Source: Air Products and Chemicals Q3 results However, looking at the margin, the company was still impacted by the ongoing gas price environment. Checking at the geographical performance: America's EBITDA was above Wall Street analysts' expectations. This was due to volume recovery in hydrogen; Asia's EBITDA was below estimates. Top-line sales were in line with last year's numbers, however, an unfavorable FX led to a margin decrease. The EMEA was the region most impacted. Volume was down by 3% and the currency effect impacted the EBITDA's margin by more than 15%. The European gas environment is hard to forecast (two follow-up notes on natural gas Engie and Uniper). In the quarter, as we can see in the presentation, merchant gas prices in Europe rose by 25%.
Air Products and Chemicals: Natural Gas Costs May Affect Its Ambitions
Air Products and Chemicals is an established industrial company that faces high costs for natural gas in its global growth business of hydrogen manufacturing and far higher energy costs generally in Europe. Passage of the Inflation Reduction Act may help; however, despite the bill’s name, Air Products will be pressed by inflation in the US. Hydrogen has a wide flammability range in both air and oxygen, making it difficult to handle commercially. Air Products and Chemicals (APD), a traditional supplier of industrial gases, has gained new markets and investor audiences with its expertise, particularly for hydrogen. It is typical that large industrial gas providers have sizable tolling contracts and take-or-pay contracts that ensure stable revenues, for example, for healthcare oxygen. However, the company's foray into hydrogen has become riskier. Methane (natural gas) for gray and blue hydrogen become much more expensive. Wind/solar energy for green hydrogen is also more expensive, as has energy for all industrial operations in Europe. Potential investors should be aware that the company has an unusual fiscal calendar: its second quarter ended March 31 and its third quarter ended June 30. Air Products' 2022 fiscal year will end September 30, 2022. In a change from my earlier analysis, I recommend selling (or not buying) Air Products. Macro Air Products is being affected by macroeconomic events in at least three ways: *inflation in all costs, which it must try to pass through, *the proposed Inflation Reduction Act in the US, which, as described below, could be favorable to Air Products, *and far higher costs for natural gas worldwide (and electricity in Europe), which is likely to constrain the profitability of making hydrogen, whether gray, blue or green. Natural gas costs are also described below. Inflation Reduction Act The Inflation Reduction Act has been proposed as a reconciliation bill (needing only 50 senators' votes plus the vice president's) that would front-load about $500 billion in spending ($385 billion for climate change and energy) with revenue recovery to pay for the spending back-loaded. According to a University of Pennsylvania analysis, the bill would do little to reduce inflation and even increase it through 2024. Air Products' Quarter Ending March 31, 2022 (fiscal 2Q) Results and Guidance For the company's second fiscal quarter of 2022-the quarter ending March 31, 2022-Air Products reported net income up 13% compared to the same quarter a year earlier: $537 million or $2.38/share. Adjusted EPS was also $2.38/share while adjusted EBITDA was $1.02 billion, up nine percent. The company's four geographic segments are: Americas, Asia, Europe, and the Middle East. For total sales of $2.95 billion in the quarter ending March 31, 2022, this divided: Americas: 40.3%, Asia: 25.5%, Europe: 25.1%, Middle East: 1.0%, Corporate & other: 8.1%. Third quarter (April 1-June 30, 2022) adjusted EPS guidance is $2.55-$2.65/share. For fiscal year 2022 (October 1, 2021-September 30, 2022), Air Products guides to adjusted EPS of $10.20-$10.40/share, up 13-15% over the prior fiscal year. The company expects capital expenditures of $4.5 to $5.0 billion during fiscal-year 2022. Operations and Hydrogen Air Products and Chemicals produces 1) atmospheric gases including oxygen, nitrogen, and argon; 2) process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas; and 3) equipment for gas production or processing for customers in refining, chemicals, gasification, metals, manufacturing, food and beverage, electronics, and magnetic resonance imaging. Hydrogen continues to attract investor attention as an alternative to carbon-containing fuels. Air Products makes "gray," "blue," and "green" hydrogen. Gray hydrogen is made from hydrocarbons (mainly methane, or natural gas). Blue hydrogen is also made from hydrocarbons but includes carbon capture and sequestration. Green hydrogen is made using wind and solar electricity to split water into oxygen and hydrogen. From an engineering and consumer marketing standpoint, investors should be aware hydrogen has an extremely wide explosive range in both air and oxygen. This makes it very difficult to use on anything other than large industrial, top-safety-measure applications, and rockets. Quoting from Explosive Lessons in Hydrogen Safety by NASA scientist Russell Rhodes (with emphasis added), Hydrogen has a very broad flammability range-a 4 percent to 74 percent concentration in air and 4 percent to 94 percent in oxygen; therefore, keeping air or oxygen from mixing with hydrogen inside confined spaces is very important. Also, it requires only 0.02 millijoules of energy to ignite the hydrogen-air mixture, which is less than 7 percent of the energy needed to ignite natural gas. Projects Air Products has several big new projects underway. For each, the project capital is the total, not APD's share. *a $12 billion air separation/gasification/power join venture with Aramco in Saudi Arabia; *a $1.3 billion net-zero hydrogen energy complex in Alberta, Canada; *a $2.0 billion hydrogen project for World Energy in California; *a $7.0 billion carbon-free hydrogen project for NEOM in Saudi Arabia; *a $4.5 billion clean energy (blue hydrogen) complex in Louisiana. Natural Gas Supplies and Costs Natural gas has experienced a step-change in cost and demand. Due to the Russian invasion of Ukraine and consequent US and European sanctions, Russia has cut back (to 20% of Nord Stream's capacity) the natural gas it exports to Europe. Before the cutbacks, Russia supplied 40% of Europe's natural gas. The EU has not been able to quickly replace the Russian cuts. This has led to emergency measures in Europe, including a requested voluntary reduction in natural gas use of 15% as countries try to stockpile natural gas for winter. To illustrate, the Henry Hub, Louisiana natural gas price for September 2022 delivery closed at $8.23/MMBTU on July 29, 2022. (This is already seasonally higher than normal due both to EU draws on LNG exports and very hot US summer weather.) However, the Dutch Title Transfer Facility ((TTF)) liquefied natural gas price for September closed at $57.29/MMBTU. Not only is this seven times the US spot price, but on a heat-equivalent basis, this equates to $344/barrel for oil.) Henry Hub Natural Gas Spot Price data by YCharts US dry gas production is 96.7 BCF/D. The graph below shows US shale gas production, so does not include conventional production. Haynesville production (dark blue) is near Air Products planned new blue hydrogen facility. Energy Information Administration However, as noted, in European (and some Asian) buyers are competing for the same natural gas in the form of LNG exports and are willing to pay higher prices. This situation is likely to continue for as many months or years as Russia exerts its clout over the EU by cutting Russian gas exports. The end result is natural gas is less affordable as feedstock for blue and gray hydrogen. Competitors Air Products and Chemicals is headquartered in Allentown, Pennsylvania. Product competitors include Air Liquide, Linde, and privately held Messer Americas. For gray and blue hydrogen whose feedstock is natural gas, both the cost of natural gas and other gas demand competitors should be considered. In both the US and Europe, natural gas (methane) is used not just to make chemicals like methanol and to fire boilers to generate electricity, but also used directly for heating. The particularly dire need for natural gas (and so high cost) in Europe to replace Russian imports means production of blue and gray hydrogen in the EU is likely to be a non-starter. In the case of green hydrogen production (from wind and solar), it is likely that providing basic electricity for residential, commercial, and essential manufacturing use-again, particularly in Europe-will come ahead of using (wind and solar-generated) electricity to make no-carbon hydrogen fuel. Governance Institutional Shareholder Services ((ISS)) ranks Air Products' overall governance on July 1, 2022, as a 5, with sub-scores of audit (5), board (6), shareholder rights (7), and compensation (3). On the ISS scale, 1 represents lower governance risk and 10 represents higher governance risk. Air Products and Chemicals' ESG ratings from Sustainalytics at May 2022 were "low" with a total risk score of 11 (2nd percentile). Component parts are environmental risk 5.9, social 1.3, and governance 3.6. Controversy level is 1 (or "low") on a scale of 0-5, with 5 as the worst. Shorts were 0.9% of floated shares at July 15, 2022. A small percentage of shares (0.3%) is held by insiders. Beta is 0.84: the stock moves directionally with the overall market but less steeply. At March 31, 2022, the four largest institutional holders, some of which represent index fund investments that match the overall market, were Vanguard (9.0%), Blackrock (6.6%), State Farm Mutual Auto Insurance Company (5.8%), and State Street (4.75%). Financial and Stock Highlights Market capitalization is $55.1 billion at a July 29, 2022, stock closing price of $248.23. The 52-week price range is $216.24-$316.39 per share, so the closing price is 78% of the 52-week high and 88% of the one-year target of $282.71 per share. Trailing twelve-months' EPS is $9.77. The average of analysts' estimates for 2023 EPS (for year ending 9/30/2022) is $11.53. This gives a current price/earnings ratio of 25.4 and a forward price/earnings ratio of 21.5. Trailing twelve-month (April 1, 2021-March 31, 2022) return on assets is 5.5% and return on equity is 15.8%. Trailing twelve months' operating cash flow is $3.06 billion and leveraged free cash flow is negative at -$14.8 million. At March 31, 2022, the company had $12.9 billion in liabilities and $27.4 billion in assets, giving Air Products a liability-to-asset ratio of 47%. Of the liabilities, $3.2 billion is current liabilities and $6.5 billion is long-term debt.
Air Products and Chemicals (NYSE:APD) Has A Pretty Healthy Balance Sheet
Some say volatility, rather than debt, is the best way to think about risk as an investor, but Warren Buffett famously...
Shareholder Returns
| APD | US Chemicals | US Market | |
|---|---|---|---|
| 7D | 0.9% | 2.0% | 1.1% |
| 1Y | -1.5% | -1.9% | -9.0% |
Return vs Industry: APD matched the US Chemicals industry which returned -1.6% over the past year.
Return vs Market: APD exceeded the US Market which returned -8.9% over the past year.
Price Volatility
| APD volatility | |
|---|---|
| APD Average Weekly Movement | 3.9% |
| Chemicals Industry Average Movement | 6.6% |
| Market Average Movement | 7.6% |
| 10% most volatile stocks in US Market | 17.0% |
| 10% least volatile stocks in US Market | 3.1% |
Stable Share Price: APD is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.
Volatility Over Time: APD's weekly volatility (4%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1940 | 20,750 | Seifi Ghasemi | https://www.airproducts.com |
Air Products and Chemicals, Inc. provides atmospheric gases, process and specialty gases, equipment, and services worldwide. The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas; specialty gases; and equipment for the production or processing of gases comprising air separation units and non-cryogenic generators for customers in various industries, including refining, chemical, gasification, metals, manufacturing, food and beverage, electronics, magnetic resonance imaging, energy production and refining, and metals. It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage.
Air Products and Chemicals Fundamentals Summary
| APD fundamental statistics | |
|---|---|
| Market Cap | US$59.44b |
| Earnings (TTM) | US$2.23b |
| Revenue (TTM) | US$11.97b |
26.6x
P/E Ratio5.0x
P/S RatioIs APD overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| APD income statement (TTM) | |
|---|---|
| Revenue | US$11.97b |
| Cost of Revenue | US$8.72b |
| Gross Profit | US$3.25b |
| Other Expenses | US$1.01b |
| Earnings | US$2.23b |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 10.06 |
| Gross Margin | 27.12% |
| Net Profit Margin | 18.64% |
| Debt/Equity Ratio | 53.9% |
How did APD perform over the long term?
See historical performance and comparisonDividends
2.4%
Current Dividend Yield62%
Payout RatioDoes APD pay a reliable dividends?
See APD dividend history and benchmarks| Air Products and Chemicals dividend dates | |
|---|---|
| Ex Dividend Date | Sep 30 2022 |
| Dividend Pay Date | Nov 14 2022 |
| Days until Ex dividend | 43 days |
| Days until Dividend pay date | 88 days |
Does APD pay a reliable dividends?
See APD dividend history and benchmarksValuation
Is APD undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
3/6Valuation Score 3/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for APD?
Other financial metrics that can be useful for relative valuation.
| What is APD's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$59.44b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 5.4x |
| Enterprise Value/EBITDA | 17.3x |
| PEG Ratio | 2.6x |
Price to Earnings Ratio vs Peers
How does APD's PE Ratio compare to its peers?
| APD PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 27.9x | ||
LIN Linde | 43.4x | 11.8% | US$153.9b |
SHW Sherwin-Williams | 36.9x | 10.9% | US$64.8b |
CTVA Corteva | 25.3x | 14.6% | US$44.5b |
DOW Dow | 6x | -10.7% | US$39.8b |
APD Air Products and Chemicals | 26.6x | 10.1% | US$59.4b |
Price-To-Earnings vs Peers: APD is good value based on its Price-To-Earnings Ratio (26.6x) compared to the peer average (27.9x).
Price to Earnings Ratio vs Industry
How does APD's PE Ratio compare vs other companies in the US Chemicals Industry?
Price-To-Earnings vs Industry: APD is expensive based on its Price-To-Earnings Ratio (26.6x) compared to the US Chemicals industry average (17.3x)
Price to Earnings Ratio vs Fair Ratio
What is APD's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 26.6x |
| Fair PE Ratio | 22.5x |
Price-To-Earnings vs Fair Ratio: APD is expensive based on its Price-To-Earnings Ratio (26.6x) compared to the estimated Fair Price-To-Earnings Ratio (22.5x).
Share Price vs Fair Value
What is the Fair Price of APD when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: APD ($268) is trading below our estimate of fair value ($1402.35)
Significantly Below Fair Value: APD is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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Future Growth
How is Air Products and Chemicals forecast to perform in the next 1 to 3 years based on estimates from 18 analysts?
Future Growth Score
2/6Future Growth Score 2/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
10.1%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: APD's forecast earnings growth (10.1% per year) is above the savings rate (1.9%).
Earnings vs Market: APD's earnings (10.1% per year) are forecast to grow slower than the US market (14.5% per year).
High Growth Earnings: APD's earnings are forecast to grow, but not significantly.
Revenue vs Market: APD's revenue (8.7% per year) is forecast to grow faster than the US market (7.9% per year).
High Growth Revenue: APD's revenue (8.7% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: APD's Return on Equity is forecast to be low in 3 years time (17.7%).
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Past Performance
How has Air Products and Chemicals performed over the past 5 years?
Past Performance Score
3/6Past Performance Score 3/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
13.5%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: APD has high quality earnings.
Growing Profit Margin: APD's current net profit margins (18.6%) are lower than last year (20%).
Past Earnings Growth Analysis
Earnings Trend: APD's earnings have grown by 13.5% per year over the past 5 years.
Accelerating Growth: APD's earnings growth over the past year (14%) exceeds its 5-year average (13.5% per year).
Earnings vs Industry: APD earnings growth over the past year (14%) underperformed the Chemicals industry 20.9%.
Return on Equity
High ROE: APD's Return on Equity (15.8%) is considered low.
Discover strong past performing companies
Financial Health
How is Air Products and Chemicals's financial position?
Financial Health Score
4/6Financial Health Score 4/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: APD's short term assets ($6.4B) exceed its short term liabilities ($3.4B).
Long Term Liabilities: APD's short term assets ($6.4B) do not cover its long term liabilities ($9.9B).
Debt to Equity History and Analysis
Debt Level: APD's net debt to equity ratio (30.5%) is considered satisfactory.
Reducing Debt: APD's debt to equity ratio has increased from 41.5% to 53.9% over the past 5 years.
Debt Coverage: APD's debt is well covered by operating cash flow (39.6%).
Interest Coverage: APD's interest payments on its debt are well covered by EBIT (18.5x coverage).
Balance Sheet
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Dividend
What is Air Products and Chemicals's current dividend yield, its reliability and sustainability?
Dividend Score
4/6Dividend Score 4/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
2.42%
Current Dividend Yield
Upcoming Dividend Payment
Dividend Yield vs Market
Notable Dividend: APD's dividend (2.42%) is higher than the bottom 25% of dividend payers in the US market (1.47%).
High Dividend: APD's dividend (2.42%) is low compared to the top 25% of dividend payers in the US market (3.95%).
Stability and Growth of Payments
Stable Dividend: APD's dividends per share have been stable in the past 10 years.
Growing Dividend: APD's dividend payments have increased over the past 10 years.
Earnings Payout to Shareholders
Earnings Coverage: With its reasonable payout ratio (62%), APD's dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: With its high cash payout ratio (506.1%), APD's dividend payments are not well covered by cash flows.
Discover strong dividend paying companies
Management
How experienced are the management team and are they aligned to shareholders interests?
3.6yrs
Average management tenure
CEO
Seifi Ghasemi (78 yo)
8.08yrs
Tenure
US$13,819,010
Compensation
Mr. Seifollah Ghasemi, also known as Seifi, has been the Chairman, Chief Executive Officer and President of Air Products and Chemicals, Inc. since July 1, 2014. Mr. Ghasemi serves as the Chief Executive Of...
CEO Compensation Analysis
Compensation vs Market: Seifi's total compensation ($USD13.82M) is about average for companies of similar size in the US market ($USD12.87M).
Compensation vs Earnings: Seifi's compensation has been consistent with company performance over the past year.
Leadership Team
Experienced Management: APD's management team is considered experienced (3.6 years average tenure).
Board Members
Experienced Board: APD's board of directors are considered experienced (8.9 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
Ownership Breakdown
Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.
Top Shareholders
Company Information
Air Products and Chemicals, Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: Air Products and Chemicals, Inc.
- Ticker: APD
- Exchange: NYSE
- Founded: 1940
- Industry: Industrial Gases
- Sector: Materials
- Implied Market Cap: US$59.442b
- Shares outstanding: 221.80m
- Website: https://www.airproducts.com
Number of Employees
Location
- Air Products and Chemicals, Inc.
- 1940 Air Products Boulevard
- Allentown
- Pennsylvania
- 18106-5500
- United States
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/17 00:00 |
| End of Day Share Price | 2022/08/17 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/09/30 |
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.