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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 7/10

vs
industry
vs
history
Cash-to-Debt 0.77
APD's Cash-to-Debt is ranked higher than
52% of the 1122 Companies
in the Global Chemicals industry.

( Industry Median: 0.72 vs. APD: 0.77 )
Ranked among companies with meaningful Cash-to-Debt only.
APD' s Cash-to-Debt Range Over the Past 10 Years
Min: 0.01  Med: 0.05 Max: 0.93
Current: 0.77
0.01
0.93
Equity-to-Asset 0.55
APD's Equity-to-Asset is ranked lower than
52% of the 1092 Companies
in the Global Chemicals industry.

( Industry Median: 0.57 vs. APD: 0.55 )
Ranked among companies with meaningful Equity-to-Asset only.
APD' s Equity-to-Asset Range Over the Past 10 Years
Min: 0.31  Med: 0.42 Max: 0.57
Current: 0.55
0.31
0.57
Debt-to-Equity 0.37
APD's Debt-to-Equity is ranked higher than
52% of the 931 Companies
in the Global Chemicals industry.

( Industry Median: 0.39 vs. APD: 0.37 )
Ranked among companies with meaningful Debt-to-Equity only.
APD' s Debt-to-Equity Range Over the Past 10 Years
Min: 0.34  Med: 0.71 Max: 1.36
Current: 0.37
0.34
1.36
Debt-to-EBITDA 1.28
APD's Debt-to-EBITDA is ranked higher than
66% of the 913 Companies
in the Global Chemicals industry.

( Industry Median: 2.12 vs. APD: 1.28 )
Ranked among companies with meaningful Debt-to-EBITDA only.
APD' s Debt-to-EBITDA Range Over the Past 10 Years
Min: 1.28  Med: 2.19 Max: 2.64
Current: 1.28
1.28
2.64
Interest Coverage 15.03
APD's Interest Coverage is ranked lower than
61% of the 1021 Companies
in the Global Chemicals industry.

( Industry Median: 29.84 vs. APD: 15.03 )
Ranked among companies with meaningful Interest Coverage only.
APD' s Interest Coverage Range Over the Past 10 Years
Min: 6.94  Med: 12.73 Max: 15.03
Current: 15.03
6.94
15.03
Piotroski F-Score: 6
Altman Z-Score: 4.64
Beneish M-Score: -2.68
WACC vs ROIC
8.60%
13.48%
WACC
ROIC
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 6/10

vs
industry
vs
history
Operating Margin % 21.43
APD's Operating Margin % is ranked higher than
89% of the 1107 Companies
in the Global Chemicals industry.

( Industry Median: 8.34 vs. APD: 21.43 )
Ranked among companies with meaningful Operating Margin % only.
APD' s Operating Margin % Range Over the Past 10 Years
Min: 10.25  Med: 15.79 Max: 21.43
Current: 21.43
10.25
21.43
Net Margin % 17.13
APD's Net Margin % is ranked higher than
89% of the 1106 Companies
in the Global Chemicals industry.

( Industry Median: 5.82 vs. APD: 17.13 )
Ranked among companies with meaningful Net Margin % only.
APD' s Net Margin % Range Over the Past 10 Years
Min: 7.65  Med: 10.86 Max: 36.65
Current: 17.13
7.65
36.65
ROE % 14.90
APD's ROE % is ranked higher than
71% of the 1107 Companies
in the Global Chemicals industry.

( Industry Median: 9.43 vs. APD: 14.90 )
Ranked among companies with meaningful ROE % only.
APD' s ROE % Range Over the Past 10 Years
Min: 8.81  Med: 17.39 Max: 34.96
Current: 14.9
8.81
34.96
ROA % 8.20
APD's ROA % is ranked higher than
70% of the 1134 Companies
in the Global Chemicals industry.

( Industry Median: 4.78 vs. APD: 8.20 )
Ranked among companies with meaningful ROA % only.
APD' s ROA % Range Over the Past 10 Years
Min: 3.57  Med: 7.25 Max: 16.44
Current: 8.2
3.57
16.44
ROC (Joel Greenblatt) % 23.54
APD's ROC (Joel Greenblatt) % is ranked higher than
72% of the 1130 Companies
in the Global Chemicals industry.

( Industry Median: 14.65 vs. APD: 23.54 )
Ranked among companies with meaningful ROC (Joel Greenblatt) % only.
APD' s ROC (Joel Greenblatt) % Range Over the Past 10 Years
Min: 13.22  Med: 17.16 Max: 23.54
Current: 23.54
13.22
23.54
3-Year Revenue Growth Rate -8.40
APD's 3-Year Revenue Growth Rate is ranked lower than
85% of the 1052 Companies
in the Global Chemicals industry.

( Industry Median: 1.70 vs. APD: -8.40 )
Ranked among companies with meaningful 3-Year Revenue Growth Rate only.
APD' s 3-Year Revenue Growth Rate Range Over the Past 10 Years
Min: -10.5  Med: 5.7 Max: 12.3
Current: -8.4
-10.5
12.3
3-Year EBITDA Growth Rate -1.30
APD's 3-Year EBITDA Growth Rate is ranked lower than
71% of the 980 Companies
in the Global Chemicals industry.

( Industry Median: 7.60 vs. APD: -1.30 )
Ranked among companies with meaningful 3-Year EBITDA Growth Rate only.
APD' s 3-Year EBITDA Growth Rate Range Over the Past 10 Years
Min: -5  Med: 4.8 Max: 15.9
Current: -1.3
-5
15.9
3-Year EPS without NRI Growth Rate 3.80
APD's 3-Year EPS without NRI Growth Rate is ranked lower than
63% of the 904 Companies
in the Global Chemicals industry.

( Industry Median: 11.10 vs. APD: 3.80 )
Ranked among companies with meaningful 3-Year EPS without NRI Growth Rate only.
APD' s 3-Year EPS without NRI Growth Rate Range Over the Past 10 Years
Min: -76.9  Med: 3.2 Max: 460.2
Current: 3.8
-76.9
460.2
GuruFocus has detected 3 Warning Signs with Air Products & Chemicals Inc APD.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
» APD's 30-Y Financials

Financials (Next Earnings Date: 2018-09-26)


Revenue & Net Income
Cash & Debt
Operating Cash Flow & Free Cash Flow
Operating Cash Flow & Net Income

» Details

Guru Trades

Q3 2017

APD Guru Trades in Q3 2017

Jim Simons 1,733,600 sh (+406.16%)
First Eagle Investment 2,313,812 sh (+80.15%)
Chris Davis 1,872 sh (+0.65%)
Mario Gabelli 2,250 sh (unchged)
Barrow, Hanley, Mewhinney & Strauss 9,349,750 sh (-4.83%)
Steven Cohen 538,088 sh (-9.92%)
Dodge & Cox 5,050 sh (-16.53%)
Joel Greenblatt 30,746 sh (-58.18%)
Caxton Associates 4,800 sh (-80.41%)
Paul Tudor Jones 1,939 sh (-85.68%)
» More
Q4 2017

APD Guru Trades in Q4 2017

Ken Fisher 1,290 sh (New)
Pioneer Investments 119,304 sh (New)
Caxton Associates 6,800 sh (+41.67%)
Paul Tudor Jones 2,480 sh (+27.90%)
Chris Davis 1,883 sh (+0.59%)
Dodge & Cox 5,050 sh (unchged)
Steven Cohen 503,237 sh (-6.48%)
Barrow, Hanley, Mewhinney & Strauss 8,670,921 sh (-7.26%)
Mario Gabelli 2,050 sh (-8.89%)
Jim Simons 1,578,500 sh (-8.95%)
Joel Greenblatt 25,927 sh (-15.67%)
First Eagle Investment 679,877 sh (-70.62%)
» More
Q1 2018

APD Guru Trades in Q1 2018

Lee Ainslie 12,330 sh (New)
Mario Gabelli 21,138 sh (+931.12%)
Pioneer Investments 163,537 sh (+37.08%)
Ken Fisher 1,506 sh (+16.74%)
Chris Davis 1,894 sh (+0.58%)
Paul Tudor Jones Sold Out
Caxton Associates Sold Out
Barrow, Hanley, Mewhinney & Strauss 8,268,647 sh (-4.64%)
Dodge & Cox 3,550 sh (-29.70%)
Jim Simons 540,200 sh (-65.78%)
First Eagle Investment 214,948 sh (-68.38%)
Joel Greenblatt 7,877 sh (-69.62%)
Steven Cohen 117,511 sh (-76.65%)
» More
Q2 2018

APD Guru Trades in Q2 2018

Ray Dalio 3,294 sh (New)
Steven Cohen 161,050 sh (+37.05%)
Pioneer Investments 196,393 sh (+20.09%)
Chris Davis 1,906 sh (+0.63%)
First Eagle Investment Sold Out
Lee Ainslie Sold Out
Joel Greenblatt Sold Out
Mario Gabelli 20,618 sh (-2.46%)
Barrow, Hanley, Mewhinney & Strauss 7,919,393 sh (-4.22%)
Dodge & Cox 3,300 sh (-7.04%)
Ken Fisher 1,308 sh (-13.15%)
Jim Simons 39,200 sh (-92.74%)
» More
» Details

Insider Trades

Latest Guru Trades with APD

(List those with share number changes of more than 20%, or impact to portfolio more than 0.1%)

GuruDate Trades Impact to Portfolio Price Range * (?) Current Price Change from Average Current Shares
Barrow, Hanley, Mewhinney & Strauss 2018-06-30 Reduce -4.22%0.09%$155.16 - $169.44 $ 170.584%7,919,393
Mario Gabelli 2018-06-30 Reduce -2.46%$155.16 - $169.44 $ 170.584%20,618
Dodge & Cox 2018-06-30 Reduce -7.04%$155.16 - $169.44 $ 170.584%3,300
Chris Davis 2018-06-30 Add 0.63%$155.16 - $169.44 $ 170.584%1,906
Ken Fisher 2018-06-30 Reduce -13.15%$155.16 - $169.44 $ 170.584%1,308
Joel Greenblatt 2018-06-30 Sold Out 0.02%$155.16 - $169.44 $ 170.584%0
First Eagle Investment 2018-06-30 Sold Out 0.09%$155.16 - $169.44 $ 170.584%0
Barrow, Hanley, Mewhinney & Strauss 2018-03-31 Reduce -4.64%0.1%$152.8 - $174 $ 170.583%8,268,647
First Eagle Investment 2018-03-31 Reduce -68.38%0.18%$152.8 - $174 $ 170.583%214,948
Mario Gabelli 2018-03-31 Add 931.12%0.02%$152.8 - $174 $ 170.583%21,138
Joel Greenblatt 2018-03-31 Reduce -69.62%0.04%$152.8 - $174 $ 170.583%7,877
Dodge & Cox 2018-03-31 Reduce -29.70%$152.8 - $174 $ 170.583%3,550
Chris Davis 2018-03-31 Add 0.58%$152.8 - $174 $ 170.583%1,894
Ken Fisher 2018-03-31 Add 16.74%$152.8 - $174 $ 170.583%1,506
Barrow, Hanley, Mewhinney & Strauss 2017-12-31 Reduce -7.26%0.15%$152.2 - $164.62 $ 170.587%8,670,921
First Eagle Investment 2017-12-31 Reduce -70.62%0.55%$152.2 - $164.62 $ 170.587%679,877
Joel Greenblatt 2017-12-31 Reduce -15.67%0.01%$152.2 - $164.62 $ 170.587%25,927
Mario Gabelli 2017-12-31 Reduce -8.89%$152.2 - $164.62 $ 170.587%2,050
Chris Davis 2017-12-31 Add 0.59%$152.2 - $164.62 $ 170.587%1,883
Ken Fisher 2017-12-31 New Buy$152.2 - $164.62 $ 170.587%1,290
Barrow, Hanley, Mewhinney & Strauss 2017-09-30 Reduce -4.83%0.1%$142.13 - $151.53 $ 170.5817%9,349,750
First Eagle Investment 2017-09-30 Add 80.15%0.35%$142.13 - $151.53 $ 170.5817%2,313,812
Joel Greenblatt 2017-09-30 Reduce -58.18%0.09%$142.13 - $151.53 $ 170.5817%30,746
Dodge & Cox 2017-09-30 Reduce -16.53%$142.13 - $151.53 $ 170.5817%5,050
Chris Davis 2017-09-30 Add 0.65%$142.13 - $151.53 $ 170.5817%1,872
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Business Description

Industry: Chemicals » Chemicals    NAICS: 325180    SIC: 2819
Compare:XTER:LINU, TSE:4063, XKRX:051915, TPE:1301, TPE:1303, TPE:1326, TSE:3407, XKLS:5183, XPAR:AI, NYSE:EMN, NYSE:CE, XBRU:SOLB, XSWX:EMSN, XSGO:SQM-A, BKK:PTTGC, TSE:4188, XKRX:011170, BSP:BRKM5, SAU:2290, BKK:IVL » details
Traded in other countries:AP3.Germany,
Headquarter Location:USA
Air Products & Chemicals Inc is a supplier of hydrogen and helium. It also provides semiconductor materials, refinery hydrogen, natural gas liquefaction and coatings and adhesives.

Established in 1940, Air Products is among the largest global producers of atmospheric gases and is the world's largest supplier of hydrogen and helium. It offers a unique portfolio of products and services in a number of industries, including energy, electronics, chemicals, metals, and manufacturing. The company operates in more than 40 countries, with international sales representing more than half of revenue. In fiscal 2016, Air Products generated $9.5 billion in sales and employed roughly 19,000 workers.

Guru Investment Theses on Air Products & Chemicals Inc

Bill Ackman Comments on Air Products - Nov 16, 2017

We recently sold our remaining shares of Air Products (NYSE:APD) (“APD”), concluding a highly successful activist investment. During our four-and-half-year investment, APD delivered a 104.7% total shareholder return. In comparison, the S&P 500 returned 69.9% over the same period.

Prior to our investment, APD had slipped from an industry leader to a laggard. While APD participated in a good industry and had produced positive shareholder returns over time, its performance was substantially inferior to its peers and its potential. APD’s margins of 15% trailed direct competitor Praxair’s 23% margins. Furthermore, APD’s operational inefficiency led to subpar growth. The company also owned several non-core specialty materials businesses, and had a history of poor capital allocation.

APD’s underperformance was purportedly due to myriad reasons detailed by the prior management team and accepted by the analyst community. Our extensive due diligence revealed that with a proper transformation, APD could achieve meaningfully higher margins and growth.

We built our position in APD during the summer of 2013 and announced our investment in late July. We then engaged with the board of APD, which carefully and constructively evaluated the opportunities for improvement we had identified. Within two months of announcing our investment, we reached an agreement with APD to add three directors to the board, including two Pershing Square nominees and one mutually agreed upon director.

APD’s former CEO and board concluded that a change in leadership was necessary to effectuate the necessary transformation of the business. The board then launched a search process for a new CEO and we were provided full transparency on the process with the ability to assess candidates. After a nine-month search, APD’s board selected one of our director nominees, Seifi Ghasemi, to serve as its CEO.

Within months of taking over as CEO, Seifi announced his goal to make APD the most profitable industrial gas company in the world by restructuring the organization, transforming the culture, focusing on the company’s core industrial gas business, and implementing a more disciplined approach to capital allocation. The results that Seifi and his team have delivered have been remarkable, and have exceeded the conservative estimates we put forth at the time of our investment. Air Products is now the most profitable company in the industrial gas industry, with an operating margin of 22%. The company has executed spinoff and sale transactions for its non-core materials businesses, generating substantial cash proceeds and leverage capacity which is being deployed into high-return, core industrial gas assets. As a result of these improvements, APD has delivered double-digit EPS growth for three consecutive years despite foreign exchange headwinds.

Air Products’ board deserves enormous credit for engaging constructively and helping the company deliver on its potential. CEO Seifi Ghasemi and his team, including Industrial Gases Executive Vice President Corning Painter and CFO Scott Crocco, who were both at APD under prior leadership, have done a superb job transforming APD for the benefit of all stakeholders.

From Bill Ackman (Trades, Portfolio)'s third quarter 2017 shareholder letter.

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Bill Ackman Comments on Air Products and Chemicals - Aug 18, 2017

APD (NYSE:APD) continues to deliver strong results for its shareholders. On July 27, 2017, the company reported that Fiscal Q3 earnings per share grew 15%, driven by 8% revenue growth from increased volumes and 90 basis points of underlying margin expansion. Revenue growth was driven by organic growth and contributions from new plants coming on stream. Margin performance reflects continued operating efficiencies. Management has stated that they “have more work to do on productivity” and that “they continue to see productivity opportunities.” Equipment sales, which are more episodic, added to APD’s strong performance.

While foreign currency headwinds have been a material drag on APD’s results in recent years, we expect this dynamic will start to become a modest tailwind assuming that rates stay at current levels. A modest global recovery in industrial activity is another positive factor that we expect will fuel further growth.

In addition to the organic growth APD has achieved, the company continues to bring on stream growth capex projects, including large facilities in India and China, which are producing results. Growth capex continues to drive meaningful increases in cash flow despite significantly reduced capex budgets as new projects benefit from the capable underwriting of CEO Seifi Ghasemi and his team.

One of the largest catalysts for APD’s further value creation remains the use of the company’s excess capital. The company currently has approximately $5 billion of investment capital, comprised of cash and leverage capacity. Management expects this amount to grow to $8 billion over the coming three years, as the company generates annual cash flow of approximately $1 billion before growth capex and after dividends. On the recent call, CEO Seifi Ghasemi reiterated that the company will be disciplined in deploying this cash in value-generating projects.

We reduced our position in Air Products during the quarter for portfolio management reasons.

From Bill Ackman (Trades, Portfolio)'s second quarter 2017 shareholder letter.

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Bill Ackman Comments on Air Products and Chemicals - May 12, 2017

Air Products (NYSE:APD) continues to deliver for its shareholders. Fiscal year Q2 results showed continued operating progress with underlying revenue growth of 7% and earnings per share growth of 4%. Revenue growth was driven by 7% volume and flat pricing. Excluding energy pass-through and mix factors, underlying EBITDA margins declined 40 basis points as productivity gains were offset by higher costs from maintenance outages of facilities in the U.S., delayed recovery of energy prices in Europe in the merchant market, and the ramp of lower-margin tonnage contracts in Asia.

Management stated that it was “disappointed that our underlying productivity did not fully translate to the bottom line” and that “there is more to come in productivity.” These comments are consistent with our view that Air Products continues to have potential for further operating productivity and margin expansion.

Air Products’ fiscal year ending September 2017 guidance calls for earnings per share of $6.00 to $6.25, or 6% to 11% growth over the prior year. This earnings guidance excludes the benefit from the investment of the company’s significant excess capital. While management has been cautious on the economy, APD’s business has historically closely tracked industrial production. U.S. industrial production has been negative in recent years, but has now turned positive since the election for the first time in the last 18 months.

We believe the biggest driver of APD’s earnings growth over the coming years will be the company’s deployment of its excess capital. The company has $2.5 billion of excess cash and an additional $2.5 billion of debt capacity and will generate additional excess capital of $1 billion per year after paying dividends for a total of $8 billion of capital available for investment over the next three years.

CEO Seifi Ghasemi has stated that we “remain confident, and I'd like to stress the word confident, that we can deploy the $8 billion into high-return, value-creating investments in our core industrial gases business.” Seifi has a great track record of allocating capital for shareholders. We believe that Seifi and his team are being patient in their deployment of shareholder capital in pursuit of opportunities to invest in high-return acquisitions and projects. Absent sufficient attractive opportunities to deploy capital, we would expect Air Products to return capital to shareholders.

From Bill Ackman (Trades, Portfolio)'s first quarter 2017 shareholder letter.


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Bill Ackman Comments on Air Products and Chemicals - May 08, 2017

During 2016, Air Products and Chemicals, Inc. (NYSE:APD) continued to make substantial progress on its transformation under its CEO Seifi Ghasemi. Management has restructured the company into a decentralized organization with greater accountability while transforming the culture and aligning pay with improvements in regional operating results.

Operating margins continued to improve during the most recent fiscal year, increasing 400 basis points to 23.1% in 2016 (APD’s fiscal year ends September 30th, and this year’s results included the non-core businesses subsequently divested and spun). This significant improvement in operating margins drove a 14% increase in earnings per share, exceeding the high end of the company’s fiscal year guidance despite 3% foreign exchange headwinds.

During the year, Air Products executed spinoff and sale transactions for its non-core electronic materials and performance materials businesses, generating substantial cash proceeds. Following these transactions, the company now has minimal net debt with cash on hand and leverage capacity totaling approximately $5 billion. We expect management to invest this capital wisely in the currently opportunistic acquisition environment for core industrial gas assets. The company has highlighted potential small acquisitions and the purchase of captive assets from customers as two potential sources of opportunity.

In January, Air Products issued fiscal year 2017 first quarter results, which showed 9% growth in earnings per share. The quarterly result announcement included a reduction in fiscal year 2017 guidance originally issued in October. While the company reduced guidance by $0.25, only five cents of this reduction is related to the core industrial gases business with the remainder driven by spin-related accounting adjustments, foreign exchange movements, and lower sales of equipment. Seifi highlighted concerns relating to the current uncertainty resulting from the new U.S. administration, Brexit, and upcoming European elections as the cause for his reduced outlook for the core industrial gas business. Notably, Seifi emphasized that the company has not seen any particular weakness in its business, but is simply taking a cautious tone on guidance given the current uncertainty.

If Seifi’s caution about the economy turns out to be conservative and in fact, the new administration contributes to economic growth with successful initiatives in corporate tax reform, infrastructure spending and deregulation, Air Products should be a big beneficiary. While our investment thesis is not predicated on improvements in economic growth, any improvements in growth from recently weak levels should improve Air Products’ organic volume and pricing trends in its merchant business.

Air Products’ revised fiscal year 2017 EPS guidance of $6.00 to $6.25 represents growth of 6% to 11% over the prior year. The guidance is principally driven by continued operating productivity and returns on growth capex and assumes continued economic weakness. Seifi has emphasized that the guidance for the fiscal year does not include any use of the company’s excess capital. As such, this earnings estimate meaningfully understates the company’s true underlying earnings power. We also believe that GAAP earnings understate the true economic earnings of the company as we believe the company’s core assets are longer-lived than the periods over which they are depreciated.

We believe the upside in APD remains significant. APD’s business is extremely high-quality, reasonably priced and run by outstanding management.

Air Products’ total shareholder return (7), including dividends and the spinoff of Versum, was 24.0% in 2016.

From 2016 annual letter to shareholders of Pershing Square by Bill Ackman (Trades, Portfolio).

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Bill Ackman Comments on Air Products and Chemicals - Mar 30, 2017

During 2016, Air Products and Chemicals, Inc. (NYSE:APD) continued to make substantial progress on its transformation under its CEO Seifi Ghasemi. Management has restructured the company into a decentralized organization with greater accountability while transforming the culture and aligning pay with improvements in regional operating results.



Operating margins continued to improve during the most recent fiscal year, increasing 400 basis points to 23.1% in 2016 (APD’s fiscal year ends September 30th, and this year’s results included the non-core businesses subsequently divested and spun). This significant improvement in operating margins drove a 14% increase in earnings per share, exceeding the high end of the company’s fiscal year guidance despite 3% foreign exchange headwinds.



During the year, Air Products executed spinoff and sale transactions for its non-core electronic materials and performance materials businesses, generating substantial cash proceeds. Following these transactions, the company now has minimal net debt with cash on hand and leverage capacity totaling approximately $5 billion. We expect management to invest this capital wisely in the currently opportunistic acquisition environment for core industrial gas assets. The company has highlighted potential small acquisitions and the purchase of captive assets from customers as two potential sources of opportunity.



In January, Air Products issued fiscal year 2017 first quarter results, which showed 9% growth in earnings per share. The quarterly result announcement included a reduction in fiscal year 2017 guidance originally issued in October. While the company reduced guidance by $0.25, only five cents of this reduction is related to the core industrial gases business with the remainder driven by spin-related accounting adjustments, foreign exchange movements, and lower sales of equipment. Seifi highlighted concerns relating to the current uncertainty resulting from the new U.S. administration, Brexit, and upcoming European elections as the cause for his reduced outlook for the core industrial gas business. Notably, Seifi emphasized that the company has not seen any particular weakness in its business, but is simply taking a cautious tone on guidance given the current uncertainty.



If Seifi’s caution about the economy turns out to be conservative and in fact, the new administration contributes to economic growth with successful initiatives in corporate tax reform, infrastructure spending and deregulation, Air Products should be a big beneficiary. While our investment thesis is not predicated on improvements in economic growth, any improvements in growth from recently weak levels should improve Air Products’ organic volume and pricing trends in its merchant business.



Air Products’ revised fiscal year 2017 EPS guidance of $6.00 to $6.25 represents growth of 6% to 11% over the prior year. The guidance is principally driven by continued operating productivity and returns on growth capex and assumes continued economic weakness. Seifi has emphasized that the guidance for the fiscal year does not include any use of the company’s excess capital. As such, this earnings estimate meaningfully understates the company’s true underlying earnings power. We also believe that GAAP earnings understate the true economic earnings of the company as we believe the company’s core assets are longer-lived than the periods over which they are depreciated.



We believe the upside in APD remains significant. APD’s business is extremely high-quality, reasonably priced and run by outstanding management.



Air Products’ total shareholder return (7), including dividends and the spinoff of Versum, was 24.0% in 2016.






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Bill Ackman Comments on Air Products - Dec 09, 2016

Air Products’ (NYSE:APD) fiscal year fourth quarter earnings per share of $2.01 increased 10% over the prior year. This strong performance was driven by a 260 basis point increase in operating margins. This quarter marked the ninth straight quarter of double-digit EPS growth since Seifi Ghasemi joined Air Products as its CEO.

Sales increased 1% as 3% underlying growth was offset by a 2% drag from foreign exchange rates and the pass-through of lower energy prices. The 3% underlying growth was driven by increased volumes as pricing remained flat. Growth capex contributed to volume growth in Asia, while global economic weakness led to weak volumes elsewhere around the globe.

The highlight of the quarter was continued productivity savings and margin progression, with operating profit margins of 23.7%, up 260 basis points over the prior year. Excluding its non-core businesses, APD’s industrial gases margins were 23% percent in FY Q4, slightly above Praxair's 22% industrial gas margins. Air Products has fulfilled its goal of becoming the most profitable company in the industrial gas industry.

Full year results generated EPS growth of 14%, exceeding the high end of the company’s fiscal year guidance, despite 3% foreign exchange headwinds. Excluding these foreign exchange headwinds, EPS grew 17% for the year.

Air Products provided fiscal year 2017 EPS guidance of $6.25 to $6.50 representing growth of 9% to 13% over the prior year, excluding the recent spinoff and sale of Versum and the performance materials businesses. The guidance is principally driven by continued operating productivity and returns on growth capex. Air Products expects to achieve an additional $100 million of productivity improvement in FY 2017 which equates to $0.35 of EPS and approximately half of 2017 anticipated EPS growth.

On the earnings call, Seifi emphasized that the guidance for the fiscal year does not include any use of the $2.6 billion of net proceeds from the sale and spin of its non-core businesses. The company highlighted that it is considering opportunities for growth capex projects, small acquisitions, and share repurchases as potential uses of capital. Air Products remains optimistic about the growth capex opportunities it has identified, including in the US Gulf Coast, China, and certain limited opportunities in Europe. The company is well positioned for growth given its leadership in the tonnage market and its strong balance sheet.

APD’s December 2, 2016 price of $144.55, less the $12 of cash from the spinoff and sale, the stock trades at 20.8x earnings and 13.8x maintenance free cash flow, a price which we believe significantly discounts the company’s intrinsic value.

From Bill Ackman (Trades, Portfolio)'s Pershing Square third-quarter shareholder letter.

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Ratios

vs
industry
vs
history
PE Ratio 24.85
APD's PE Ratio is ranked lower than
60% of the 957 Companies
in the Global Chemicals industry.

( Industry Median: 18.54 vs. APD: 24.85 )
Ranked among companies with meaningful PE Ratio only.
APD' s PE Ratio Range Over the Past 10 Years
Min: 9.29  Med: 19 Max: 58.19
Current: 24.85
9.29
58.19
Forward PE Ratio 20.88
APD's Forward PE Ratio is ranked lower than
68% of the 114 Companies
in the Global Chemicals industry.

( Industry Median: 16.29 vs. APD: 20.88 )
Ranked among companies with meaningful Forward PE Ratio only.
N/A
PE Ratio without NRI 25.46
APD's PE Ratio without NRI is ranked lower than
60% of the 958 Companies
in the Global Chemicals industry.

( Industry Median: 18.80 vs. APD: 25.46 )
Ranked among companies with meaningful PE Ratio without NRI only.
APD' s PE Ratio without NRI Range Over the Past 10 Years
Min: 8.28  Med: 20.83 Max: 39.1
Current: 25.46
8.28
39.1
Price-to-Owner-Earnings 22.33
APD's Price-to-Owner-Earnings is ranked higher than
54% of the 541 Companies
in the Global Chemicals industry.

( Industry Median: 22.77 vs. APD: 22.33 )
Ranked among companies with meaningful Price-to-Owner-Earnings only.
APD' s Price-to-Owner-Earnings Range Over the Past 10 Years
Min: 9.53  Med: 22.38 Max: 148.36
Current: 22.33
9.53
148.36
PB Ratio 3.58
APD's PB Ratio is ranked lower than
77% of the 1099 Companies
in the Global Chemicals industry.

( Industry Median: 1.83 vs. APD: 3.58 )
Ranked among companies with meaningful PB Ratio only.
APD' s PB Ratio Range Over the Past 10 Years
Min: 1.71  Med: 3.17 Max: 4.54
Current: 3.58
1.71
4.54
PS Ratio 4.26
APD's PS Ratio is ranked lower than
84% of the 1085 Companies
in the Global Chemicals industry.

( Industry Median: 1.27 vs. APD: 4.26 )
Ranked among companies with meaningful PS Ratio only.
APD' s PS Ratio Range Over the Past 10 Years
Min: 0.86  Med: 2.08 Max: 5.28
Current: 4.26
0.86
5.28
Price-to-Free-Cash-Flow 31.81
APD's Price-to-Free-Cash-Flow is ranked lower than
59% of the 439 Companies
in the Global Chemicals industry.

( Industry Median: 22.93 vs. APD: 31.81 )
Ranked among companies with meaningful Price-to-Free-Cash-Flow only.
APD' s Price-to-Free-Cash-Flow Range Over the Past 10 Years
Min: 14.87  Med: 34.8 Max: 513.88
Current: 31.81
14.87
513.88
Price-to-Operating-Cash-Flow 14.62
APD's Price-to-Operating-Cash-Flow is ranked higher than
52% of the 602 Companies
in the Global Chemicals industry.

( Industry Median: 14.12 vs. APD: 14.62 )
Ranked among companies with meaningful Price-to-Operating-Cash-Flow only.
APD' s Price-to-Operating-Cash-Flow Range Over the Past 10 Years
Min: 5.35  Med: 11.36 Max: 23.19
Current: 14.62
5.35
23.19
EV-to-EBIT 18.45
APD's EV-to-EBIT is ranked lower than
58% of the 986 Companies
in the Global Chemicals industry.

( Industry Median: 14.73 vs. APD: 18.45 )
Ranked among companies with meaningful EV-to-EBIT only.
APD' s EV-to-EBIT Range Over the Past 10 Years
Min: 7.9  Med: 17.8 Max: 29.1
Current: 18.45
7.9
29.1
EV-to-EBITDA 12.72
APD's EV-to-EBITDA is ranked lower than
52% of the 1002 Companies
in the Global Chemicals industry.

( Industry Median: 11.50 vs. APD: 12.72 )
Ranked among companies with meaningful EV-to-EBITDA only.
APD' s EV-to-EBITDA Range Over the Past 10 Years
Min: 5.1  Med: 11 Max: 17.8
Current: 12.72
5.1
17.8
EV-to-Revenue 4.38
APD's EV-to-Revenue is ranked lower than
83% of the 1098 Companies
in the Global Chemicals industry.

( Industry Median: 1.45 vs. APD: 4.38 )
Ranked among companies with meaningful EV-to-Revenue only.
APD' s EV-to-Revenue Range Over the Past 10 Years
Min: 1.2  Med: 2.6 Max: 6.2
Current: 4.38
1.2
6.2
PEG Ratio 84.67
APD's PEG Ratio is ranked lower than
99% of the 577 Companies
in the Global Chemicals industry.

( Industry Median: 1.67 vs. APD: 84.67 )
Ranked among companies with meaningful PEG Ratio only.
APD' s PEG Ratio Range Over the Past 10 Years
Min: 0.62  Med: 4.01 Max: 285
Current: 84.67
0.62
285
Shiller PE Ratio 28.01
APD's Shiller PE Ratio is ranked higher than
50% of the 362 Companies
in the Global Chemicals industry.

( Industry Median: 25.88 vs. APD: 28.01 )
Ranked among companies with meaningful Shiller PE Ratio only.
APD' s Shiller PE Ratio Range Over the Past 10 Years
Min: 17.26  Med: 27.15 Max: 42.38
Current: 28.01
17.26
42.38
Current Ratio 2.40
APD's Current Ratio is ranked higher than
66% of the 1116 Companies
in the Global Chemicals industry.

( Industry Median: 1.90 vs. APD: 2.40 )
Ranked among companies with meaningful Current Ratio only.
APD' s Current Ratio Range Over the Past 10 Years
Min: 0.77  Med: 1.27 Max: 3.08
Current: 2.4
0.77
3.08
Quick Ratio 2.24
APD's Quick Ratio is ranked higher than
76% of the 1116 Companies
in the Global Chemicals industry.

( Industry Median: 1.37 vs. APD: 2.24 )
Ranked among companies with meaningful Quick Ratio only.
APD' s Quick Ratio Range Over the Past 10 Years
Min: 0.59  Med: 0.98 Max: 2.89
Current: 2.24
0.59
2.89
Days Inventory 19.38
APD's Days Inventory is ranked higher than
92% of the 1075 Companies
in the Global Chemicals industry.

( Industry Median: 64.18 vs. APD: 19.38 )
Ranked among companies with meaningful Days Inventory only.
APD' s Days Inventory Range Over the Past 10 Years
Min: 18.73  Med: 34.5 Max: 44.46
Current: 19.38
18.73
44.46
Days Sales Outstanding 50.72
APD's Days Sales Outstanding is ranked higher than
71% of the 1082 Companies
in the Global Chemicals industry.

( Industry Median: 68.33 vs. APD: 50.72 )
Ranked among companies with meaningful Days Sales Outstanding only.
APD' s Days Sales Outstanding Range Over the Past 10 Years
Min: 50.72  Med: 55.56 Max: 65.6
Current: 50.72
50.72
65.6
Days Payable 116.43
APD's Days Payable is ranked higher than
88% of the 1061 Companies
in the Global Chemicals industry.

( Industry Median: 56.72 vs. APD: 116.43 )
Ranked among companies with meaningful Days Payable only.
APD' s Days Payable Range Over the Past 10 Years
Min: 35.43  Med: 45.97 Max: 116.43
Current: 116.43
35.43
116.43

Dividend & Buy Back

vs
industry
vs
history
Dividend Yield % 2.41
APD's Dividend Yield % is ranked higher than
69% of the 1294 Companies
in the Global Chemicals industry.

( Industry Median: 1.88 vs. APD: 2.41 )
Ranked among companies with meaningful Dividend Yield % only.
APD' s Dividend Yield % Range Over the Past 10 Years
Min: 1.62  Med: 2.53 Max: 4.14
Current: 2.41
1.62
4.14
Dividend Payout Ratio 0.61
APD's Dividend Payout Ratio is ranked lower than
79% of the 837 Companies
in the Global Chemicals industry.

( Industry Median: 0.28 vs. APD: 0.61 )
Ranked among companies with meaningful Dividend Payout Ratio only.
APD' s Dividend Payout Ratio Range Over the Past 10 Years
Min: 0.34  Med: 0.59 Max: 0.75
Current: 0.61
0.34
0.75
3-Year Dividend Growth Rate 7.10
APD's 3-Year Dividend Growth Rate is ranked lower than
57% of the 545 Companies
in the Global Chemicals industry.

( Industry Median: 9.50 vs. APD: 7.10 )
Ranked among companies with meaningful 3-Year Dividend Growth Rate only.
APD' s 3-Year Dividend Growth Rate Range Over the Past 10 Years
Min: 5.4  Med: 9.1 Max: 15.1
Current: 7.1
5.4
15.1
Forward Dividend Yield % 2.58
APD's Forward Dividend Yield % is ranked higher than
67% of the 1264 Companies
in the Global Chemicals industry.

( Industry Median: 2.05 vs. APD: 2.58 )
Ranked among companies with meaningful Forward Dividend Yield % only.
N/A
5-Year Yield-on-Cost % 3.49
APD's 5-Year Yield-on-Cost % is ranked higher than
71% of the 1280 Companies
in the Global Chemicals industry.

( Industry Median: 2.42 vs. APD: 3.49 )
Ranked among companies with meaningful 5-Year Yield-on-Cost % only.
APD' s 5-Year Yield-on-Cost % Range Over the Past 10 Years
Min: 2.36  Med: 3.68 Max: 6.03
Current: 3.49
2.36
6.03
3-Year Average Share Buyback Ratio -0.70
APD's 3-Year Average Share Buyback Ratio is ranked higher than
65% of the 627 Companies
in the Global Chemicals industry.

( Industry Median: -3.80 vs. APD: -0.70 )
Ranked among companies with meaningful 3-Year Average Share Buyback Ratio only.
APD' s 3-Year Average Share Buyback Ratio Range Over the Past 10 Years
Min: -1.8  Med: 0 Max: 2
Current: -0.7
-1.8
2

Valuation & Return

vs
industry
vs
history
Price-to-Tangible-Book 4.05
APD's Price-to-Tangible-Book is ranked lower than
75% of the 1058 Companies
in the Global Chemicals industry.

( Industry Median: 1.97 vs. APD: 4.05 )
Ranked among companies with meaningful Price-to-Tangible-Book only.
APD' s Price-to-Tangible-Book Range Over the Past 10 Years
Min: 1.41  Med: 3.41 Max: 5.46
Current: 4.05
1.41
5.46
Price-to-Intrinsic-Value-Projected-FCF 2.24
APD's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
67% of the 622 Companies
in the Global Chemicals industry.

( Industry Median: 1.43 vs. APD: 2.24 )
Ranked among companies with meaningful Price-to-Intrinsic-Value-Projected-FCF only.
APD' s Price-to-Intrinsic-Value-Projected-FCF Range Over the Past 10 Years
Min: 1.12  Med: 2.08 Max: 5.03
Current: 2.24
1.12
5.03
Price-to-Median-PS-Value 2.04
APD's Price-to-Median-PS-Value is ranked lower than
82% of the 1029 Companies
in the Global Chemicals industry.

( Industry Median: 1.08 vs. APD: 2.04 )
Ranked among companies with meaningful Price-to-Median-PS-Value only.
APD' s Price-to-Median-PS-Value Range Over the Past 10 Years
Min: 0.37  Med: 0.77 Max: 2.32
Current: 2.04
0.37
2.32
Price-to-Graham-Number 2.14
APD's Price-to-Graham-Number is ranked lower than
70% of the 877 Companies
in the Global Chemicals industry.

( Industry Median: 1.33 vs. APD: 2.14 )
Ranked among companies with meaningful Price-to-Graham-Number only.
APD' s Price-to-Graham-Number Range Over the Past 10 Years
Min: 0.79  Med: 1.71 Max: 12.52
Current: 2.14
0.79
12.52
Earnings Yield (Greenblatt) % 5.42
APD's Earnings Yield (Greenblatt) % is ranked lower than
51% of the 1133 Companies
in the Global Chemicals industry.

( Industry Median: 5.92 vs. APD: 5.42 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) % only.
APD' s Earnings Yield (Greenblatt) % Range Over the Past 10 Years
Min: 3.4  Med: 5.6 Max: 12.7
Current: 5.42
3.4
12.7
Forward Rate of Return (Yacktman) % 3.48
APD's Forward Rate of Return (Yacktman) % is ranked lower than
68% of the 702 Companies
in the Global Chemicals industry.

( Industry Median: 9.68 vs. APD: 3.48 )
Ranked among companies with meaningful Forward Rate of Return (Yacktman) % only.
APD' s Forward Rate of Return (Yacktman) % Range Over the Past 10 Years
Min: 0.3  Med: 5.05 Max: 17.6
Current: 3.48
0.3
17.6

More Statistics

Revenue (TTM) (Mil) $8,834.40
EPS (TTM) $ 6.87
Beta1.06
Volatility10.82%
52-Week Range $149.94 - 175.17
Shares Outstanding (Mil)219.27

Analyst Estimate

Sep18 Sep19 Sep20
Revenue (Mil $) 9,018 9,664 10,208
EBIT (Mil $) 2,043 2,323 2,607
EBITDA (Mil $) 3,102 3,441 3,827
EPS ($) 7.39 8.27 9.52
EPS without NRI ($) 7.39 8.27 9.52
EPS Growth Rate
(Future 3Y To 5Y Estimate)
12.59%
Dividends per Share ($) 4.18 4.57 4.95

Piotroski F-Score Details

Piotroski F-Score: 66
Positive ROAY
Positive CFROAY
Higher ROA yoyN
CFROA > ROAY
Lower Leverage yoyN
Higher Current Ratio yoyY
Less Shares Outstanding yoyN
Higher Gross Margin yoyY
Higher Asset Turnover yoyY

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