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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 0.85
NYSE:APD's Cash-to-Debt is ranked higher than
50% of the 1137 Companies
in the Global Chemicals industry.

( Industry Median: 0.83 vs. NYSE:APD: 0.85 )
Ranked among companies with meaningful Cash-to-Debt only.
NYSE:APD' s Cash-to-Debt Range Over the Past 10 Years
Min: 0.01  Med: 0.05 Max: 0.86
Current: 0.85
0.01
0.86
Equity-to-Asset 0.53
NYSE:APD's Equity-to-Asset is ranked lower than
55% of the 1096 Companies
in the Global Chemicals industry.

( Industry Median: 0.56 vs. NYSE:APD: 0.53 )
Ranked among companies with meaningful Equity-to-Asset only.
NYSE:APD' s Equity-to-Asset Range Over the Past 10 Years
Min: 0.31  Med: 0.42 Max: 0.53
Current: 0.53
0.31
0.53
Debt-to-Equity 0.42
NYSE:APD's Debt-to-Equity is ranked lower than
51% of the 867 Companies
in the Global Chemicals industry.

( Industry Median: 0.41 vs. NYSE:APD: 0.42 )
Ranked among companies with meaningful Debt-to-Equity only.
NYSE:APD' s Debt-to-Equity Range Over the Past 10 Years
Min: 0.41  Med: 0.72 Max: 1.36
Current: 0.42
0.41
1.36
Debt-to-EBITDA 1.33
NYSE:APD's Debt-to-EBITDA is ranked higher than
59% of the 910 Companies
in the Global Chemicals industry.

( Industry Median: 2.09 vs. NYSE:APD: 1.33 )
Ranked among companies with meaningful Debt-to-EBITDA only.
NYSE:APD' s Debt-to-EBITDA Range Over the Past 10 Years
Min: 1.33  Med: 2.04 Max: 2.62
Current: 1.33
1.33
2.62
Interest Coverage 15.86
NYSE:APD's Interest Coverage is ranked lower than
65% of the 1020 Companies
in the Global Chemicals industry.

( Industry Median: 32.34 vs. NYSE:APD: 15.86 )
Ranked among companies with meaningful Interest Coverage only.
NYSE:APD' s Interest Coverage Range Over the Past 10 Years
Min: 6.94  Med: 10.5 Max: 18.23
Current: 15.86
6.94
18.23
Piotroski F-Score: 7
Altman Z-Score: 4.50
Beneish M-Score: -2.66
WACC vs ROIC
7.58%
12.72%
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 % 19.49
NYSE:APD's Operating Margin % is ranked higher than
86% of the 1114 Companies
in the Global Chemicals industry.

( Industry Median: 7.82 vs. NYSE:APD: 19.49 )
Ranked among companies with meaningful Operating Margin % only.
NYSE:APD' s Operating Margin % Range Over the Past 10 Years
Min: 10.25  Med: 14.7 Max: 22.11
Current: 19.49
10.25
22.11
Net Margin % 29.40
NYSE:APD's Net Margin % is ranked higher than
97% of the 1114 Companies
in the Global Chemicals industry.

( Industry Median: 5.78 vs. NYSE:APD: 29.40 )
Ranked among companies with meaningful Net Margin % only.
NYSE:APD' s Net Margin % Range Over the Past 10 Years
Min: 6.63  Med: 10.55 Max: 29.4
Current: 29.4
6.63
29.4
ROE % 36.56
NYSE:APD's ROE % is ranked higher than
95% of the 1101 Companies
in the Global Chemicals industry.

( Industry Median: 9.33 vs. NYSE:APD: 36.56 )
Ranked among companies with meaningful ROE % only.
NYSE:APD' s ROE % Range Over the Past 10 Years
Min: 8.81  Med: 17.39 Max: 36.56
Current: 36.56
8.81
36.56
ROA % 16.85
NYSE:APD's ROA % is ranked higher than
93% of the 1143 Companies
in the Global Chemicals industry.

( Industry Median: 4.81 vs. NYSE:APD: 16.85 )
Ranked among companies with meaningful ROA % only.
NYSE:APD' s ROA % Range Over the Past 10 Years
Min: 3.57  Med: 7.25 Max: 16.85
Current: 16.85
3.57
16.85
ROC (Joel Greenblatt) % 22.47
NYSE:APD's ROC (Joel Greenblatt) % is ranked higher than
59% of the 1138 Companies
in the Global Chemicals industry.

( Industry Median: 14.24 vs. NYSE:APD: 22.47 )
Ranked among companies with meaningful ROC (Joel Greenblatt) % only.
NYSE:APD' s ROC (Joel Greenblatt) % Range Over the Past 10 Years
Min: 12.57  Med: 18.76 Max: 23.28
Current: 22.47
12.57
23.28
3-Year Revenue Growth Rate -3.10
NYSE:APD's 3-Year Revenue Growth Rate is ranked lower than
64% of the 1035 Companies
in the Global Chemicals industry.

( Industry Median: 0.50 vs. NYSE:APD: -3.10 )
Ranked among companies with meaningful 3-Year Revenue Growth Rate only.
NYSE:APD' s 3-Year Revenue Growth Rate Range Over the Past 10 Years
Min: -3.1  Med: 5.7 Max: 12.3
Current: -3.1
-3.1
12.3
3-Year EBITDA Growth Rate 8.80
NYSE:APD's 3-Year EBITDA Growth Rate is ranked higher than
52% of the 950 Companies
in the Global Chemicals industry.

( Industry Median: 8.00 vs. NYSE:APD: 8.80 )
Ranked among companies with meaningful 3-Year EBITDA Growth Rate only.
NYSE:APD' s 3-Year EBITDA Growth Rate Range Over the Past 10 Years
Min: -9.5  Med: 5.9 Max: 18.5
Current: 8.8
-9.5
18.5
3-Year EPS without NRI Growth Rate 13.60
NYSE:APD's 3-Year EPS without NRI Growth Rate is ranked higher than
55% of the 880 Companies
in the Global Chemicals industry.

( Industry Median: 9.70 vs. NYSE:APD: 13.60 )
Ranked among companies with meaningful 3-Year EPS without NRI Growth Rate only.
NYSE:APD' s 3-Year EPS without NRI Growth Rate Range Over the Past 10 Years
Min: -33.2  Med: 7.8 Max: 50.9
Current: 13.6
-33.2
50.9
GuruFocus has detected 2 Warning Signs with Air Products & Chemicals Inc NYSE:APD.
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» NYSE:APD's 30-Y Financials

Financials (Next Earnings Date: 2018-01-26)


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

» Details

Guru Trades

Q3 2016

APD Guru Trades in Q3 2016

Joel Greenblatt 27,756 sh (New)
Jim Simons 379,800 sh (New)
Steven Cohen 570,000 sh (+53.31%)
Chris Davis 1,825 sh (+0.55%)
Mario Gabelli 2,350 sh (unchged)
First Eagle Investment 526,605 sh (unchged)
Dodge & Cox 6,250 sh (unchged)
John Griffin Sold Out
Paul Tudor Jones Sold Out
Barrow, Hanley, Mewhinney & Strauss 9,392,443 sh (-9.21%)
Andreas Halvorsen 4,822,354 sh (-30.56%)
Bill Ackman 4,025,140 sh (-47.05%)
Ray Dalio 3,600 sh (-78.18%)
» More
Q4 2016

APD Guru Trades in Q4 2016

George Soros 1,400 sh (New)
Paul Tudor Jones 11,247 sh (New)
Caxton Associates 110,000 sh (New)
Jim Simons 571,800 sh (+50.55%)
Steven Cohen 695,100 sh (+21.95%)
Chris Davis 1,836 sh (+0.60%)
Andreas Halvorsen Sold Out
Ray Dalio Sold Out
Dodge & Cox 6,200 sh (-0.80%)
First Eagle Investment 521,605 sh (-0.95%)
Barrow, Hanley, Mewhinney & Strauss 9,039,774 sh (-3.75%)
Bill Ackman 3,870,760 sh (-3.84%)
Mario Gabelli 2,250 sh (-4.26%)
Joel Greenblatt 1,758 sh (-93.67%)
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Q1 2017

APD Guru Trades in Q1 2017

Ray Dalio 4,759 sh (New)
Joel Greenblatt 78,166 sh (+4346.30%)
First Eagle Investment 1,789,910 sh (+243.15%)
Paul Tudor Jones 18,634 sh (+65.68%)
Barrow, Hanley, Mewhinney & Strauss 9,651,446 sh (+6.77%)
Chris Davis 1,848 sh (+0.65%)
Mario Gabelli 2,250 sh (unchged)
George Soros Sold Out
Dodge & Cox 6,150 sh (-0.81%)
Jim Simons 392,600 sh (-31.34%)
Bill Ackman 2,280,138 sh (-41.09%)
Steven Cohen 330,500 sh (-52.45%)
Caxton Associates 35,000 sh (-68.18%)
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Q2 2017

APD Guru Trades in Q2 2017

Steven Cohen 597,361 sh (+80.74%)
Barrow, Hanley, Mewhinney & Strauss 9,824,433 sh (+1.79%)
Chris Davis 1,860 sh (+0.65%)
Mario Gabelli 2,250 sh (unchged)
Ray Dalio Sold Out
Bill Ackman Sold Out
Dodge & Cox 6,050 sh (-1.63%)
Joel Greenblatt 73,523 sh (-5.94%)
Jim Simons 342,500 sh (-12.76%)
Paul Tudor Jones 13,537 sh (-27.35%)
First Eagle Investment 1,284,361 sh (-28.24%)
Caxton Associates 24,500 sh (-30.00%)
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» Details

Insider Trades

Latest Guru Trades with NYSE: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 2017-06-30 Add 1.79%0.04%$134.3 - $147.22 $ 154.229%9,824,433
First Eagle Investment 2017-06-30 Reduce -28.24%0.17%$134.3 - $147.22 $ 154.229%1,284,361
Joel Greenblatt 2017-06-30 Reduce -5.94%0.01%$134.3 - $147.22 $ 154.229%73,523
Dodge & Cox 2017-06-30 Reduce -1.63%$134.3 - $147.22 $ 154.229%6,050
Chris Davis 2017-06-30 Add 0.65%$134.3 - $147.22 $ 154.229%1,860
Bill Ackman 2017-06-30 Sold Out 5.18%$134.3 - $147.22 $ 154.229%0
Barrow, Hanley, Mewhinney & Strauss 2017-03-31 Add 6.77%0.12%$134.94 - $148.81 $ 154.229%9,651,446
Bill Ackman 2017-03-31 Reduce -41.09%3.87%$134.94 - $148.81 $ 154.229%2,280,138
First Eagle Investment 2017-03-31 Add 243.15%0.43%$134.94 - $148.81 $ 154.229%1,789,910
Joel Greenblatt 2017-03-31 Add 4346.30%0.13%$134.94 - $148.81 $ 154.229%78,166
Dodge & Cox 2017-03-31 Reduce -0.81%$134.94 - $148.81 $ 154.229%6,150
Chris Davis 2017-03-31 Add 0.65%$134.94 - $148.81 $ 154.229%1,848
George Soros 2017-03-31 Sold Out 0.01%$134.94 - $148.81 $ 154.229%0
Barrow, Hanley, Mewhinney & Strauss 2016-12-31 Reduce -3.75%0.07%$132.26 - $149.64 $ 154.2210%9,039,774
Bill Ackman 2016-12-31 Reduce -3.84%0.4%$132.26 - $149.64 $ 154.2210%3,870,760
First Eagle Investment 2016-12-31 Reduce -0.95%$132.26 - $149.64 $ 154.2210%521,605
Dodge & Cox 2016-12-31 Reduce -0.80%$132.26 - $149.64 $ 154.2210%6,200
Mario Gabelli 2016-12-31 Reduce -4.26%$132.26 - $149.64 $ 154.2210%2,250
Chris Davis 2016-12-31 Add 0.60%$132.26 - $149.64 $ 154.2210%1,836
Joel Greenblatt 2016-12-31 Reduce -93.67%0.05%$132.26 - $149.64 $ 154.2210%1,758
George Soros 2016-12-31 New Buy0.01%$132.26 - $149.64 $ 154.2210%1,400
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Business Description

Industry: Chemicals » Chemicals    NAICS: 325180    SIC: 2819
Compare:XTER:LIN, TSE:4063, TPE:1303, TPE:1301, TPE:1326, TSE:3407, XKRX:051915, SHSE:600309, XSWX:EMSN, XBRU:SOLB, XPAR:AI, NYSE:CE, XKLS:5183, XSGO:SQM-A, TSE:4188, NYSE:EMN, NYSE:FMC, XKRX:011170, XTER:FPE3, BSP:BRKM3 » 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 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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Bill Ackman Comments on Air Products and Chemicals - Aug 29, 2016

Air Products' (NYSE:APD) recent quarterly results marked the eighth straight quarter of double-digit EPS growth as APD continues its impressive transformation under CEO Seifi Ghasemi and his team.

APD's fiscal year third quarter earnings per share of $1.92 were up 16% while currency-adjusted EPS growth was 19%. These impressive results were driven by currency-adjusted sales growth of 4% and operating margins which were up 340 basis points (bps) to 23.0%. Sales growth was driven by 4% volume growth, largely due to volume contributions from growth investments, and flat pricing. Margins increased across each major operating segment, including each region for industrial gases as well as the non-core Versum materials technology business. We believe this broad-based operating improvement is a testament to the cultural impact Seifi has had on APD along with the benefits of the company's decentralized operating model which has empowered local operating executives to drive performance and unlock the company's latent potential.

On the strength of these strong results and its near-term outlook, APD increased the lower end of its fiscal year earnings guidance by $0.05 to $7.45 to $7.55, which at the midpoint reflects 14% growth over the prior year despite modest foreign exchange headwinds.

While APD has made significant progress improving its operating margin from —15.5% to —23% since our investment, and now has a consolidated operating margin in-line with best-in-class peer Praxair, we believe that APD has additional opportunities to extract operating efficiencies. Adjusted for non-core businesses, APD's industrial gas margins remain substantially below Praxair's. Management has provided guidance which suggests that APD can extract $225 million of additional operating efficiencies over the next three years.

The company remains enthusiastic about the growth capex opportunities for large on-site air separation units and hydrogen facilities, businesses in which APD has strong leadership positions. Seifi and his team are disciplined about investing capital in growth capex projects that meet appropriate return hurdles.

Air Products' plan to sell and spin off its non-core materials technology and electronics materials businesses is also progressing as planned. Subsequent to its announced spin off of these businesses as a newly formed company named Versum, the company announced the sale of the materials technology segment of the business to Evonik for 16 times EBITDA, a price that will yield an attractive —12 times EBITDA net price for Air Products' shareholders after the company pays taxes on the gain from the sale of this business. APD is proceeding with the planned spinoff of the remaining electronics materials business in the coming months. The electronics business, which produced FY 2015 sales and EBITDA of $1 billion and $302 million, respectively, is a leading provider of materials and delivery systems equipment to the semiconductor industry and has strong secular growth prospects due to the proliferation of consumer electronics devices around the world. The electronics business has meaningfully improved its operating margins and competitive positioning under CEO Guillermo Novo and his team, and is well positioned to be a successful independent company.

Overall, we expect APD to continue to deliver double-digit EPS growth for the next several years as it extracts additional cost efficiencies, brings on-stream growth capex projects, drives organic performance, and allocates capital to acquisitions, growth capex or the repurchases of its shares in a manner which maximizes returns for investors. We believe the company's long-term outlook remains robust and its shares remain at a discount to their intrinsic value.

From Bill Ackman (Trades, Portfolio)'s mid-year 2016 letter.

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Bill Ackman Comments on Air Products and Chemicals - May 11, 2016

APD (NYSE:APD) delivered its seventh consecutive quarter of double-digit earnings-per-share (“EPS”) growth under the leadership of CEO Seifi Ghasemi, despite continued foreign exchange (“FX”) and other headwinds. In the first quarter of 2016 (APD’s fiscal 2Q), the company grew EPS by 17%, exceeding consensus estimates by a modest amount. Results were driven by a significant improvement in margins which increased 500 basis points (“bps”) during the quarter to 23.4%. Now halfway through its fiscal year, the company also increased annual EPS guidance modestly to $7.40 to $7.55 or 12% to 14% growth for Fiscal Year 2016.

While the margin improvement was impressive, the company’s volume trends reflected the current economic environment and muted global growth. Sales were $2.3 billion, down 6%, due to decreased energy pass-through (-3%) and FX headwinds (-3%). Underlying growth was flat, on flat volume and pricing. In North America and Europe, APD continued to grow price 1% to 2%, a level it has achieved since Seifi joined. APD can control pricing more than volume, so we view this as a positive sign that the company should be able to sustain modest price growth if and when global growth and volume returns.

Versum, APD’s Materials Technologies business, reported modestly increased profits. It produced a 6% decline in organic revenue due to lower equipment sales in electronics (which are often lumpy) and weak macro trends. Despite lower sales, margins increased 290 bps to 26.2% and EBIT was up 4%. This weak revenue growth and strong margin performance were consistent with recent trends.

APD’s consolidated operating income was up 20% as operating margins increased 500 bps to 23.4%. Of this increase, 460 bps reflected organic improvements while 40 bps was from lower energy pass-through to customers, (which inflates margins with no profit impact). Margins increased across all regions and businesses. Excluding Versum, industrial gas margins were ~22.7%, still ~200 bps behind Praxair’s industrial gas margins. The company intends to close this gap through a further $225 million of operating efficiencies in 2017 to 2019. Seifi stated that he is pleased with the company’s progress on capturing operating efficiencies.

The company lowered full-year capex guidance from $1.3 to $1.2 billion, due to the lower cost of specific projects in the budget. The company brought on-stream a large-scale hydrogen facility in Edmonton, Alberta, which is connected to a regional pipeline and further expands APD’s hydrogen presence in this region. APD spent $400 million on this facility which should produce ~$0.10 to 0.15 cents of earnings per share based on the Company’s guidance for returns on capital expenditures. Growth capex will continue to be an important driver of earnings growth. As the company takes a more disciplined approach to capex, which is expected to be at lower levels than under previous management, we expect returns on capital to increase, generating more capital for share repurchases and dividends.

On May 6th, APD announced that it had signed a definitive agreement to sell the Performance Materials Division (PMD) of its Materials Technologies segment to Evonik Industries AG, a world leader in specialty chemicals and materials, for $3.8 billion. APD had previously announced that it would spin off PMD with its Electronics Material Division (“EMD”) later this year. We view the sale favorably because by selling the business, APD generates cash proceeds that can be used for investment in the business or shareholder return, while eliminating market risk from the financing required for a spinoff transaction. The company will incur substantial taxes on the sale, but, in light of the high purchase price, reflecting its value to a strategic buyer, the net proceeds are likely to generate more value than could be achieved in a spinoff. APD intends to proceed with the spinoff or sale of the EMD later this year, subject to market conditions.

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

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Ratios

vs
industry
vs
history
PE Ratio 11.57
APD's PE Ratio is ranked higher than
78% of the 943 Companies
in the Global Chemicals industry.

( Industry Median: 19.43 vs. APD: 11.57 )
Ranked among companies with meaningful PE Ratio only.
APD' s PE Ratio Range Over the Past 10 Years
Min: 9.29  Med: 19.09 Max: 58.19
Current: 11.57
9.29
58.19
Forward PE Ratio 22.12
APD's Forward PE Ratio is ranked lower than
77% of the 96 Companies
in the Global Chemicals industry.

( Industry Median: 17.30 vs. APD: 22.12 )
Ranked among companies with meaningful Forward PE Ratio only.
N/A
PE Ratio without NRI 24.75
APD's PE Ratio without NRI is ranked lower than
58% of the 943 Companies
in the Global Chemicals industry.

( Industry Median: 19.62 vs. APD: 24.75 )
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: 19.3 Max: 30.69
Current: 24.75
8.28
30.69
Price-to-Owner-Earnings 12.76
APD's Price-to-Owner-Earnings is ranked higher than
76% of the 512 Companies
in the Global Chemicals industry.

( Industry Median: 24.00 vs. APD: 12.76 )
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: 23.85 Max: 191.52
Current: 12.76
9.53
191.52
PB Ratio 3.57
APD's PB Ratio is ranked lower than
71% of the 1099 Companies
in the Global Chemicals industry.

( Industry Median: 2.00 vs. APD: 3.57 )
Ranked among companies with meaningful PB Ratio only.
APD' s PB Ratio Range Over the Past 10 Years
Min: 1.71  Med: 3.09 Max: 4.54
Current: 3.57
1.71
4.54
PS Ratio 3.40
APD's PS Ratio is ranked lower than
81% of the 1095 Companies
in the Global Chemicals industry.

( Industry Median: 1.38 vs. APD: 3.40 )
Ranked among companies with meaningful PS Ratio only.
APD' s PS Ratio Range Over the Past 10 Years
Min: 0.86  Med: 1.96 Max: 3.92
Current: 3.4
0.86
3.92
Price-to-Free-Cash-Flow 20.68
APD's Price-to-Free-Cash-Flow is ranked lower than
57% of the 359 Companies
in the Global Chemicals industry.

( Industry Median: 19.81 vs. APD: 20.68 )
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: 15.09  Med: 41.37 Max: 770.82
Current: 20.68
15.09
770.82
Price-to-Operating-Cash-Flow 12.10
APD's Price-to-Operating-Cash-Flow is ranked lower than
57% of the 469 Companies
in the Global Chemicals industry.

( Industry Median: 11.23 vs. APD: 12.10 )
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: 14.83
Current: 12.1
5.35
14.83
EV-to-EBIT 16.91
APD's EV-to-EBIT is ranked lower than
61% of the 969 Companies
in the Global Chemicals industry.

( Industry Median: 15.64 vs. APD: 16.91 )
Ranked among companies with meaningful EV-to-EBIT only.
APD' s EV-to-EBIT Range Over the Past 10 Years
Min: 7.9  Med: 15.4 Max: 24.1
Current: 16.91
7.9
24.1
EV-to-EBITDA 11.64
APD's EV-to-EBITDA is ranked lower than
55% of the 994 Companies
in the Global Chemicals industry.

( Industry Median: 12.33 vs. APD: 11.64 )
Ranked among companies with meaningful EV-to-EBITDA only.
APD' s EV-to-EBITDA Range Over the Past 10 Years
Min: 5.1  Med: 9.9 Max: 14.9
Current: 11.64
5.1
14.9
EV-to-Revenue 3.45
APD's EV-to-Revenue is ranked lower than
80% of the 1104 Companies
in the Global Chemicals industry.

( Industry Median: 1.54 vs. APD: 3.45 )
Ranked among companies with meaningful EV-to-Revenue only.
APD' s EV-to-Revenue Range Over the Past 10 Years
Min: 1.2  Med: 2.4 Max: 4.6
Current: 3.45
1.2
4.6
PEG Ratio 4.86
APD's PEG Ratio is ranked lower than
74% of the 521 Companies
in the Global Chemicals industry.

( Industry Median: 2.04 vs. APD: 4.86 )
Ranked among companies with meaningful PEG Ratio only.
APD' s PEG Ratio Range Over the Past 10 Years
Min: 0.64  Med: 4.55 Max: 33.71
Current: 4.86
0.64
33.71
Shiller PE Ratio 26.80
APD's Shiller PE Ratio is ranked higher than
59% of the 271 Companies
in the Global Chemicals industry.

( Industry Median: 30.43 vs. APD: 26.80 )
Ranked among companies with meaningful Shiller PE Ratio only.
APD' s Shiller PE Ratio Range Over the Past 10 Years
Min: 17.19  Med: 27.36 Max: 42.19
Current: 26.8
17.19
42.19
Current Ratio 2.20
APD's Current Ratio is ranked higher than
61% of the 1015 Companies
in the Global Chemicals industry.

( Industry Median: 1.90 vs. APD: 2.20 )
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: 2.2
Current: 2.2
0.77
2.2
Quick Ratio 2.08
APD's Quick Ratio is ranked higher than
72% of the 1015 Companies
in the Global Chemicals industry.

( Industry Median: 1.38 vs. APD: 2.08 )
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: 2.08
Current: 2.08
0.59
2.08
Days Inventory 24.18
APD's Days Inventory is ranked higher than
86% of the 1075 Companies
in the Global Chemicals industry.

( Industry Median: 66.54 vs. APD: 24.18 )
Ranked among companies with meaningful Days Inventory only.
APD' s Days Inventory Range Over the Past 10 Years
Min: 24.18  Med: 35.79 Max: 41.5
Current: 24.18
24.18
41.5
Days Sales Outstanding 40.39
APD's Days Sales Outstanding is ranked higher than
69% of the 922 Companies
in the Global Chemicals industry.

( Industry Median: 62.94 vs. APD: 40.39 )
Ranked among companies with meaningful Days Sales Outstanding only.
APD' s Days Sales Outstanding Range Over the Past 10 Years
Min: 40.39  Med: 55.29 Max: 62.98
Current: 40.39
40.39
62.98

Dividend & Buy Back

vs
industry
vs
history
Dividend Yield % 2.41
APD's Dividend Yield % is ranked higher than
75% of the 1160 Companies
in the Global Chemicals industry.

( Industry Median: 1.77 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: 2.52 Max: 4.14
Current: 2.41
1.62
4.14
Dividend Payout Ratio 0.58
APD's Dividend Payout Ratio is ranked lower than
80% of the 779 Companies
in the Global Chemicals industry.

( Industry Median: 0.30 vs. APD: 0.58 )
Ranked among companies with meaningful Dividend Payout Ratio only.
APD' s Dividend Payout Ratio Range Over the Past 10 Years
Min: 0.32  Med: 0.51 Max: 0.66
Current: 0.58
0.32
0.66
3-Year Dividend Growth Rate 7.00
APD's 3-Year Dividend Growth Rate is ranked higher than
51% of the 552 Companies
in the Global Chemicals industry.

( Industry Median: 6.30 vs. APD: 7.00 )
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: 9.4 Max: 15.3
Current: 7
5.4
15.3
Forward Dividend Yield % 2.46
APD's Forward Dividend Yield % is ranked higher than
71% of the 1118 Companies
in the Global Chemicals industry.

( Industry Median: 1.87 vs. APD: 2.46 )
Ranked among companies with meaningful Forward Dividend Yield % only.
N/A
5-Year Yield-on-Cost % 3.67
APD's 5-Year Yield-on-Cost % is ranked higher than
76% of the 1388 Companies
in the Global Chemicals industry.

( Industry Median: 2.12 vs. APD: 3.67 )
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: 2.46  Med: 3.82 Max: 6.28
Current: 3.67
2.46
6.28
3-Year Average Share Buyback Ratio -1.00
APD's 3-Year Average Share Buyback Ratio is ranked higher than
60% of the 592 Companies
in the Global Chemicals industry.

( Industry Median: -2.60 vs. APD: -1.00 )
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: -2  Med: 0 Max: 2
Current: -1
-2
2

Valuation & Return

vs
industry
vs
history
Price-to-Tangible-Book 4.03
APD's Price-to-Tangible-Book is ranked lower than
70% of the 1055 Companies
in the Global Chemicals industry.

( Industry Median: 2.18 vs. APD: 4.03 )
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: 3.34 Max: 5.55
Current: 4.03
1.41
5.55
Price-to-Intrinsic-Value-Projected-FCF 2.29
APD's Price-to-Intrinsic-Value-Projected-FCF is ranked lower than
67% of the 528 Companies
in the Global Chemicals industry.

( Industry Median: 1.56 vs. APD: 2.29 )
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: 1.13  Med: 2.08 Max: 5.03
Current: 2.29
1.13
5.03
Price-to-Median-PS-Value 1.74
APD's Price-to-Median-PS-Value is ranked lower than
78% of the 1005 Companies
in the Global Chemicals industry.

( Industry Median: 1.29 vs. APD: 1.74 )
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: 0.4  Med: 0.81 Max: 1.82
Current: 1.74
0.4
1.82
Price-to-Peter-Lynch-Fair-Value 4.82
APD's Price-to-Peter-Lynch-Fair-Value is ranked lower than
93% of the 319 Companies
in the Global Chemicals industry.

( Industry Median: 1.19 vs. APD: 4.82 )
Ranked among companies with meaningful Price-to-Peter-Lynch-Fair-Value only.
APD' s Price-to-Peter-Lynch-Fair-Value Range Over the Past 10 Years
Min: 0.56  Med: 2.22 Max: 36.45
Current: 4.82
0.56
36.45
Price-to-Graham-Number 2.10
APD's Price-to-Graham-Number is ranked lower than
63% of the 797 Companies
in the Global Chemicals industry.

( Industry Median: 1.47 vs. APD: 2.10 )
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: 1.64 Max: 5.45
Current: 2.1
0.79
5.45
Earnings Yield (Greenblatt) % 5.91
APD's Earnings Yield (Greenblatt) % is ranked lower than
52% of the 1141 Companies
in the Global Chemicals industry.

( Industry Median: 5.02 vs. APD: 5.91 )
Ranked among companies with meaningful Earnings Yield (Greenblatt) % only.
APD' s Earnings Yield (Greenblatt) % Range Over the Past 10 Years
Min: 4.1  Med: 6.5 Max: 12.7
Current: 5.91
4.1
12.7
Forward Rate of Return (Yacktman) % 7.64
APD's Forward Rate of Return (Yacktman) % is ranked lower than
58% of the 645 Companies
in the Global Chemicals industry.

( Industry Median: 9.25 vs. APD: 7.64 )
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: 2.4  Med: 6.3 Max: 17.3
Current: 7.64
2.4
17.3

More Statistics

Revenue (TTM) (Mil) $9,950.70
EPS (TTM) $ 13.33
Beta1.06
Short Percentage of Float1.09%
52-Week Range $129.00 - 154.74
Shares Outstanding (Mil)217.96

Analyst Estimate

Sep17 Sep18 Sep19
Revenue (Mil $) 8,492 9,118 9,047
EPS ($) 6.59 7.38 7.35
EPS without NRI ($) 6.59 7.38 7.35
EPS Growth Rate
(Future 3Y To 5Y Estimate)
14.61%
Dividends per Share ($) 3.65 3.85 4.18

Piotroski F-Score Details

Piotroski F-Score: 77
Positive ROAY
Positive CFROAY
Higher ROA yoyY
CFROA > ROAN
Lower Leverage yoyY
Higher Current Ratio yoyY
Less Shares Outstanding yoyN
Higher Gross Margin yoyY
Higher Asset Turnover yoyY

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