Air Products and Chemicals, Inc. (APD) | Investment Case

1. Company Snapshot

1.a. Company Description

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, Inc.has a strategic collaboration with Baker Hughes Company to develop hydrogen compression systems.

The company was founded in 1940 and is headquartered in Allentown, Pennsylvania.

Show Full description

1.b. Last Insights on APD

Breaking News: Air Products and Chemicals, Inc. reported strong Q1 earnings, beating estimates with $3.16 per share, up 10% from the prior year. Sales rose 5.8% year over year on gains across regions, driven by lower costs that lifted margins. Adjusted operating income increased 12% across reporting segments, with an operating margin of 24.4%. The company is rated a 'Buy' by growth investors, citing stability, expanding margins, and disciplined capital allocation. A 'Buy' recommendation is given by growth investors, citing the company's strong balance sheet and exposure to clean hydrogen.

1.c. Company Highlights

Last Price	273.52
Change Percentage	0.93%
Open	271.79
Previous Close	270.99
Market Cap ( Millions)	60883
Volume	383276
Year High	341.14
Year Low	229.11
M A 50	254.78
M A 200	271.2

FCF Yield	-2.56%
Dividend Yield	2.62%
ROE	-2.20%
Debt / Equity	117.70%
Net Debt / EBIDTA	1210.55%
Price To Book	3.95
Price Earnings Ratio	-182.62
Price To FCF	-39.05
Price To sales	4.99
EV / EBITDA	55.18

2. Air Products' Q4 and Full-Year Fiscal 2025 Results Exceed Expectations

Air Products reported earnings per share of $12.03 for the fiscal year 2025, surpassing the midpoint of their guidance range. The company's operating income margin stood at 23.7%, and return on capital was 10.1%. The actual EPS for the quarter came out at $3.39, slightly beating estimates of $3.38. The company's financial performance was marked by a helium headwind of $0.49, slightly better than the expected $0.50-$0.55. Revenue growth is estimated to be around 3.9% next year.

Publication Date: Nov -08

                                    📋 Highlights
                                    EPS Growth and Guidance:
                                                Q4 EPS of $12.03 exceeded guidance mid-point; 2026 guidance of $12.85–$13.15 implies 7–9% annual growth.
Shareholder Returns:
                                                $1.6 billion returned in fiscal 2025, continuing 43rd consecutive year of dividend increases.
Capital Efficiency:
                                                2026 CapEx of $4 billion (up from $3.1 billion) reflects new project wins, with long-term reduction to $2.5 billion/year post-large projects.
NEOM Project Progress:
                                                90% complete with ammonia production slated for 2027, contributing to future growth and green ammonia potential.
Cost Savings and Workforce Reduction:
                                                3,600 headcount cuts (16% of peak workforce) expected to save $250 million annually ($0.90/share) post-implementation.

                                

Guidance and Outlook

For 2026, Air Products expects high single-digit annual EPS growth, with a guidance range of $12.85 to $13.15, representing 7% to 9% growth from the prior year. The company has outlined three key priorities: delivering EPS growth, optimizing its large projects portfolio, and balancing capital allocation to improve its balance sheet. Air Products anticipates reducing capital expenditures to roughly $2.5 billion per year after completing several large projects, with 2026 capital expenditures expected to be around $4 billion.

Project Updates

The NEOM project is progressing well, with 90% completion, and ammonia production expected to start in 2027. The Louisiana blue hydrogen project has faced challenges, with Air Products evaluating proposals to divest the carbon sequestration assets and seeking firm offtake agreements for hydrogen and nitrogen. The company is working on a project in Louisiana, with offtaker partners, and will provide an update on the project's CapEx when a final investment decision (FID) is made.

Valuation Metrics

With a P/E Ratio of -146.69, P/B Ratio of 3.34, and EV/EBITDA of 55.39, the market seems to be pricing in a challenging growth trajectory for Air Products. The company's Dividend Yield stands at 2.75%, indicating a relatively stable return for investors. The Net Debt / EBITDA ratio is 12.17, suggesting a significant debt burden.

Segment Performance

The electronics segment, representing 17% of total sales, is a key growth area, with ongoing investments in Asia and new project bids. The company has a strong position in this market and expects growth, with a new asset coming on stream in Taiwan. Equity affiliate income growth was driven by a strong Mexican joint venture, and the company expects flat equity affiliate income in 2026, with potential growth from Jazan joint venture.

Future Growth Prospects

Air Products has provided guidance on growth through 2029, with a range of 6-9%, and assumes a minimum contribution from the NEOM project. The company is divesting its coal gasification projects in China, which have been a drag on operating profit, and is in the process of selling these assets. The European regulation aiming to convert 1% of fuels to RFNBO by 2030 could create a market for green hydrogen and ammonia, with potential opportunities for Air Products.

3. NewsRoom

Air Products and Chemicals: Not Too Late To Buy Now

12:30

Source: seekingalpha.com

Peterson Wealth Services Has $370,000 Stock Position in Air Products and Chemicals, Inc. $APD

10:09

Source: defenseworld.net

Strengthening Families & Communities LLC Increases Holdings in Air Products and Chemicals, Inc. $APD

08:12

Source: defenseworld.net

Air Products Analysts Increase Their Forecasts Following Upbeat Q1 Results

Feb -02

Source: benzinga.com

Air Products Expands NASA Partnership With $140M Contracts

Feb -02

Source: zacks.com

Here's What Key Metrics Tell Us About Air Products and Chemicals (APD) Q1 Earnings

Feb -02

Source: zacks.com

Air Products And Chemicals: Strong Growth At A Reasonable Price

Feb -02

Source: seekingalpha.com

Air Products and Chemicals Q1 Earnings Call Highlights

Feb -01

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.50%)

6. Segments

Americas

Expected Growth: 6.5%

The 6.5% growth in Americas for Air Products and Chemicals, Inc. is driven by strong demand for industrial gases, particularly in the healthcare and food & beverage sectors. Additionally, the company's strategic investments in new production facilities and expansion of existing ones have increased capacity, contributing to the segment's growth.

Asia

Expected Growth: 8.0%

Asia segment growth of 8.0% driven by strong demand for industrial gases, particularly in China and India. Key drivers include increasing industrial production, infrastructure development, and growing demand from the electronics and energy sectors. Air Products' strategic investments in new plants and expansions also contribute to growth.

Europe

Expected Growth: 5.5%

Europe's 5.5% growth from Air Products and Chemicals, Inc. is driven by increasing demand for industrial gases, particularly in the healthcare and energy sectors. Additionally, the region's focus on sustainability and reducing carbon footprint supports growth in areas like hydrogen fueling and electronics manufacturing.

Middle East and India

Expected Growth: 7.5%

Air Products and Chemicals, Inc.'s Middle East and India segment growth of 7.5% is driven by increasing demand for industrial gases, particularly in the petrochemical and refining sectors. Expanding infrastructure and government initiatives to boost economic diversification also contribute to growth. Rising investments in the region's energy and chemical industries further support the segment's strong performance.

Corporate and Other

Expected Growth: 4.0%

The 4.0% growth in Corporate and Other segment of Air Products and Chemicals, Inc. is driven by higher interest income from investments and increased energy efficiency projects. Additionally, gains from asset sales and favorable impacts from tax rate changes also contributed to the growth.

7. Detailed Products

Industrial Gases

Air Products and Chemicals, Inc. provides a range of industrial gases including oxygen, nitrogen, argon, and others used in various industries such as manufacturing, healthcare, and food processing.

Process Gases

The company offers process gases such as hydrogen, carbon monoxide, and ammonia used in the production of chemicals, fuels, and power.

Electronics Gases

Air Products and Chemicals, Inc. provides specialty gases and chemicals used in the production of semiconductors, flat panel displays, and solar panels.

Performance Materials

The company offers a range of performance materials including epoxy curing agents, polyurethane additives, and specialty additives used in various industries.

Equipment and Services

Air Products and Chemicals, Inc. provides equipment and services for the production, transportation, and storage of gases and chemicals.

LNG (Liquefied Natural Gas) Technology

The company offers LNG technology and equipment for the production, storage, and transportation of LNG.

8. Air Products and Chemicals, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Air Products and Chemicals, Inc. operates in a industry with moderate threat of substitutes. The company's products are diversified and have few substitutes, but some of its products face competition from alternative technologies.

Bargaining Power Of Customers

Air Products and Chemicals, Inc. has a diverse customer base, which reduces the bargaining power of individual customers. Additionally, the company's products are often critical to its customers' operations, making it difficult for customers to negotiate prices.

Bargaining Power Of Suppliers

Air Products and Chemicals, Inc. has a moderate level of bargaining power over its suppliers. The company is a large buyer of raw materials and has some negotiating power, but it is also dependent on a few key suppliers for certain critical materials.

Threat Of New Entrants

The chemical industry has high barriers to entry, including significant capital requirements and regulatory hurdles. This makes it difficult for new entrants to enter the market and compete with established players like Air Products and Chemicals, Inc.

Intensity Of Rivalry

The chemical industry is highly competitive, with many established players competing for market share. Air Products and Chemicals, Inc. faces intense competition from rivals such as Praxair, Linde, and Air Liquide.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	43.31%
Debt Cost	3.95%
Equity Weight	56.69%
Equity Cost	7.99%
WACC	6.24%
Leverage	76.41%

11. Quality Control: Air Products and Chemicals, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Ecolab

A-Score: 5.2/10

Value: 1.2

Growth: 5.1

Quality: 6.2

Yield: 2.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

PPG

A-Score: 5.0/10

Value: 4.0

Growth: 2.8

Quality: 6.5

Yield: 5.0

Momentum: 3.0

Volatility: 8.7

1-Year Total Return ->

Sherwin-Williams

A-Score: 4.9/10

Value: 1.7

Growth: 6.4

Quality: 6.0

Yield: 2.0

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

Air Products

A-Score: 4.4/10

Value: 4.8

Growth: 2.9

Quality: 2.1

Yield: 6.0

Momentum: 2.5

Volatility: 8.3

1-Year Total Return ->

IFF

A-Score: 4.4/10

Value: 5.4

Growth: 2.3

Quality: 3.1

Yield: 6.0

Momentum: 2.0

Volatility: 7.7

1-Year Total Return ->

DuPont

A-Score: 3.5/10

Value: 6.9

Growth: 3.7

Quality: 3.7

Yield: 4.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

24.48%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.24%

Air Products and Chemicals, Inc. - US0091581068

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on APD

1.c. Company Highlights

Less Volatile

Weak Momentum

Expensive

Earnings Beats

Revenues Miss

Average Yield

Fairly Valued

Medium Volatility

Stable Momentum

Revenues Beats

Average Quality

Earnings Miss

Strong Momentum

Higher Yield

2. Air Products' Q4 and Full-Year Fiscal 2025 Results Exceed Expectations

Guidance and Outlook

Project Updates

Valuation Metrics

Segment Performance

Future Growth Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.50%)

6. Segments

Americas

Expected Growth: 6.5%

Asia

Expected Growth: 8.0%

Europe

Expected Growth: 5.5%

Middle East and India

Expected Growth: 7.5%

Corporate and Other

Expected Growth: 4.0%

7. Detailed Products

Industrial Gases

Process Gases

Electronics Gases

Performance Materials

Equipment and Services

LNG (Liquefied Natural Gas) Technology

8. Air Products and Chemicals, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Air Products and Chemicals, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

273.52$

Current Price

12.e Scoring ^Insights

12.f DCF ^BETA