Air Products and Chemicals (APD) AI Stock Analysis

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Air Products and Chemicals

(NYSE:APD)

59Neutral

Air Products and Chemicals' overall score reflects its strong profitability and fair valuation, but it faces challenges with revenue decline, negative free cash flow, and bearish technical indicators. Strategic refocus and leadership changes are positive, yet underperforming projects and lowered guidance weigh on the outlook.

Positive Factors

Core Business Investment

The company plans to invest significantly in its core business and optimize projects to enhance future profitability.

Strategic Vision

New management has unveiled a strategic vision targeting high single-digit EPS growth from 2026 to 2029, which indicates a positive long-term growth plan.

Negative Factors

Earnings Guidance

The company lowered its full-year earnings guidance, which suggests a less optimistic outlook for its financial performance.

Project Write-downs

APD will exit three projects, resulting in up to a $3.1bn write-down.

Regulatory Challenges

APD canceled plans to construct a green liquid hydrogen facility in Massena, NY due to regulatory changes affecting tax credit eligibility and slower hydrogen market development.

Air Products and Chemicals (APD) vs. S&P 500 (SPY)

Market Cap

$62.07B

Dividend Yield2.54%

Average Volume (3M)1.41M

Price to Earnings (P/E)40.5

Beta (1Y)0.80

Revenue Growth-1.09%

EPS Growth-37.71%

CountryUS

Employees21,850

SectorBasic Materials

Sector Strength60

IndustryChemicals - Specialty

Share Statistics

EPS (TTM)2.69

Shares Outstanding222,544,220

10 Day Avg. Volume1,085,509

30 Day Avg. Volume1,406,541

Financial Highlights & Ratios

PEG Ratio>-0.01

Price to Book (P/B)4.22

Price to Sales (P/S)0.00

P/FCF Ratio-14.33

Enterprise Value/Market Cap1.24

Enterprise Value/Revenue1.60

Enterprise Value/Gross Profit20.07

Enterprise Value/Ebitda3.89

Forecast

1Y Price Target

$328.58

Price Target Upside17.80% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering13

Air Products and Chemicals Business Overview & Revenue Model

Company DescriptionAir Products and Chemicals, Inc. (APD) is a leading global industrial gases company, serving customers in a wide range of industries including energy, transportation, chemicals, food and beverage, and manufacturing. The company provides atmospheric gases, process and specialty gases, equipment, and technologies. With a focus on safety, efficiency, and sustainability, Air Products operates in over 50 countries, offering innovative solutions that enhance productivity, reduce environmental impact, and improve quality of life.

How the Company Makes MoneyAir Products and Chemicals makes money primarily through the production and sale of industrial gases such as oxygen, nitrogen, hydrogen, and argon, which are essential for a variety of industrial processes. The company's revenue streams include the sale of gases directly to customers through its on-site plants, pipeline systems, and merchant gas business. Additionally, Air Products provides equipment and technology solutions, including cryogenic and non-cryogenic gas supply systems, which further contribute to its earnings. The company also engages in significant long-term contracts and partnerships with large industrial players, securing steady revenue through strategic collaborations. Factors such as technological innovation, expansion into emerging markets, and a strong focus on sustainability initiatives are significant contributors to its financial performance.

Air Products and Chemicals Key Performance Indicators (KPIs)

Any

Operating Income by Geography

Operating Income by Geography
Shows the profitability from different regions, highlighting where the company is most efficient and where there might be challenges or opportunities for improving margins.

Chart InsightsAir Products and Chemicals shows a notable increase in operating income in the Americas, driven by a strategic refocus on core industrial gas projects. However, Asia and the Middle East and India are under pressure, with significant underperformance and project challenges. The earnings call highlights the impact of cost overruns and project cancellations, particularly in China and Alberta, affecting overall financials. Despite these hurdles, the company is optimistic about improving margins and productivity through disciplined investments and cost management, aiming for a stronger financial position by 2030.

Data provided by:

Main Street Data

Air Products and Chemicals Financial Statement Overview

Summary

Air Products and Chemicals shows strong profitability with solid margins but faces challenges with revenue decline and negative free cash flow due to high capital expenditures. The balance sheet is stable, yet increasing debt levels pose a risk.

Income Statement

Positive

Air Products and Chemicals shows a robust TTM gross profit margin of 32.25% and a net profit margin of 12.75%, indicating strong profitability. However, a revenue decline of 0.66% from the previous year suggests challenges in growing sales. The EBIT and EBITDA margins of 12.12% and 21.99% respectively, demonstrate effective cost management, although the margins have decreased compared to prior years, reflecting increased operational costs or reduced pricing power.

Balance Sheet

Positive

The company's debt-to-equity ratio of 0.98 is reasonable, indicating a balanced approach to leverage. A return on equity of 9.14% TTM suggests moderate efficiency in generating returns for shareholders. The equity ratio stands at 43.17%, reflecting a solid equity base relative to total assets. The balance sheet reflects adequate financial stability, though an increase in total debt over recent years could pose a future risk.

Cash Flow

Neutral

The operating cash flow to net income ratio of 2.19 TTM is strong, highlighting efficient cash generation from operations. However, the negative free cash flow TTM, primarily due to high capital expenditures, is concerning for liquidity. The company needs to manage its investments carefully to avoid prolonged cash flow deficits.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
12.02B	12.10B	12.60B	12.70B	10.32B	8.86B
	Gross Profit
3.84B	3.93B	3.77B	3.36B	3.14B	3.00B
	EBIT
1.46B	4.47B	2.49B	2.34B	2.28B	2.24B
	EBITDA
3.39B	6.49B	4.01B	3.80B	3.67B	3.43B
	Net Income Common Stockholders
1.53B	3.83B	2.30B	2.26B	2.10B	1.89B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.51B	2.98B	1.95B	3.30B	5.80B	6.36B
	Total Assets
29.44B	39.57B	32.00B	27.19B	26.86B	25.17B
	Total Debt
9.77B	15.01B	11.03B	7.64B	7.64B	7.91B
	Net Debt
7.53B	12.03B	9.41B	4.93B	3.17B	2.65B
	Total Liabilities
14.75B	20.90B	16.34B	13.49B	12.77B	12.73B
	Stockholders Equity
14.06B	17.04B	14.31B	13.14B	13.54B	12.08B
Cash Flow		Free Cash Flow
-4.33B	-3.15B	-1.42B	303.70M	877.70M	755.70M
	Operating Cash Flow
3.36B	3.65B	3.21B	3.23B	3.34B	3.26B
	Investing Cash Flow
-6.11B	-4.92B	-5.92B	-3.86B	-2.73B	-3.56B
	Financing Cash Flow
1.73B	2.62B	1.61B	-1.00B	-1.42B	3.28B

Air Products and Chemicals Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price278.93

Price Trends

50DMA

278.16

Positive

100DMA

293.29

Negative

200DMA

295.05

Negative

Market Momentum

MACD

-0.42

Negative

RSI

55.51

Neutral

STOCH

63.68

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For APD, the sentiment is Neutral. The current price of 278.93 is above the 20-day moving average (MA) of 270.24, above the 50-day MA of 278.16, and below the 200-day MA of 295.05, indicating a neutral trend. The MACD of -0.42 indicates Negative momentum. The RSI at 55.51 is Neutral, neither overbought nor oversold. The STOCH value of 63.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for APD.

Air Products and Chemicals Risk Analysis

Air Products and Chemicals disclosed 17 risk factors in its most recent earnings report. Air Products and Chemicals reported the most risks in the “Legal & Regulatory” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Air Products and Chemicals Peers Comparison

Overall Rating

UnderperformOutperform

Sector (50)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SHW	78 Outperform	$91.10B	34.40	70.22%	0.81%	0.26%	12.82%
LIN	76 Outperform	$215.48B	33.22	17.20%	1.24%	0.78%	6.75%
EMN	68 Neutral	$9.53B	10.52	16.16%	3.97%	2.78%	1.50%
DD	65 Neutral	$29.01B	40.24	0.06%	2.24%	4.51%	-121.68%
PPG	63 Neutral	$25.90B	19.32	18.47%	2.36%	-7.67%	-0.58%
APD	59 Neutral	$62.07B	40.54	10.45%	2.54%	-1.09%	-37.71%
Sector *	50 Neutral	$1.98B	-1.06	-21.29%	3.61%	1.95%	-30.61%

* Basic Materials Sector Average

Performance Comparison

APD

Air Products and Chemicals

278.93

19.31

7.44%

EMN

Eastman Chemical

82.58

-14.69

-15.10%

PPG

PPG Industries

114.08

-16.63

-12.72%

SHW

Sherwin-Williams Company

363.51

56.62

18.45%

DuPont de Nemours

69.32

-9.06

-11.56%

LIN

Linde

457.77

30.53

7.15%

Air Products and Chemicals Earnings Call Summary

Earnings Call Date:May 01, 2025

(Q2-2025)

% Change Since: 2.89%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted Air Products' strong core business and strategic refocus on traditional industrial gases, while addressing significant challenges with underperforming projects, cost overruns, and lower earnings guidance. Efforts to improve productivity and reduce costs are underway, but financial impacts from project issues and cancellations weigh heavily.

Q2-2025 Updates

Positive Updates

Strong Core Industrial Gas Business

Air Products' core industrial gas business, including on-site projects and merchant business, has about $12 billion in sales and an operating margin of 24%. The company sees potential for margin improvement and significant value unlocking through disciplined cost, productivity, pricing, and operational excellence.

Progress on Saudi Arabia Green Project

The Saudi Green project is progressing well, with 4 GW of solar and wind power generation expected to be completed by mid-2026 and commissioning of electrolyzers and ammonia production to follow. Product availability is expected in 2027.

Refocusing on Core Business

Air Products plans to return to its core industrial gas business model, investing about $1.5 billion per year in core industrial gas projects, focusing on high-return opportunities.

Cost Reduction and Productivity Improvement Plan

Air Products plans to reduce its headcount by 1,300 positions, with an additional 2,500 to 3,000 reductions planned between 2026 and 2028, aiming to align with 2018 levels adjusted for growth.

Negative Updates

Underperforming Projects with Significant Overruns

Air Products has $5 billion in underperforming energy transition projects with substantial cost overruns, negatively affecting financials. Some projects were designed for non-contracted pipeline sales and the hydrogen mobility market, which is delayed or reduced.

Negative Impact from Project Cancellations and Cost Reductions

Air Products took a $2.3 billion after-tax charge in Q2, including project cancellations and cost reduction measures, affecting financial results.

Alberta Project Cost and Schedule Overrun

The Edmonton Net Zero hydrogen project cost has ballooned to $3.3 billion, with completion now expected between late 2027 and early 2028, due to execution challenges and severe weather impacts.

Challenges with Gasification Projects in China

Three gasification projects in China have close to zero EPS contribution, with issues in project execution and financial performance.

Earnings Miss and Lower Guidance

Air Products reported Q2 adjusted EPS of $2.69, below previous guidance of $2.75 to $2.85, due to changes in cost estimates and lower helium contribution. Full-year guidance was also lowered to $11.85 to $12.15 EPS.

Company Guidance

In the recent earnings call, Air Products' leadership provided detailed guidance, emphasizing a strategic refocus on its core industrial gas business to enhance profitability and efficiency. The company aims to achieve an adjusted operating margin of over 20% for the fiscal year 2025, with expectations of double-digit adjusted return on capital employed (ROCE) and earnings per share (EPS) of around $12. Significant capital discipline is planned, with annual investment in core industrial gas projects projected at approximately $1.5 billion. Air Products also outlined its cautious optimism regarding large projects in Saudi Arabia and Louisiana, emphasizing that progress will rely on securing firm offtake agreements. The CEO highlighted ongoing efforts to address underperforming projects, with a focus on aligning future investments with high-return thresholds. By 2030, the company aims to achieve a 30% adjusted operating margin, mid to high-teens adjusted ROCE, and greater than 10% compounded EPS growth. Additionally, efforts to rightsize the organization include planned headcount reductions to return to 2018 levels, adjusted for growth, and improve productivity by $100 million annually.

Air Products and Chemicals Corporate Events

Business Operations and Strategy

Air Products Exits Key U.S. Projects Amid Strategic Review

Negative

Feb 24, 2025

On February 24, 2025, Air Products and Chemicals, Inc. announced its decision to exit three U.S.-based projects as part of a strategic review by its new Board of Directors and CEO. This move will result in a pre-tax charge of up to $3.1 billion in fiscal 2025’s second quarter, primarily for asset write-downs and contract terminations. The projects include a sustainable aviation fuel expansion in California, a green liquid hydrogen facility in New York, and a carbon monoxide production project in Texas. The company cited challenging commercial aspects, regulatory developments, and unfavorable project economics as reasons for these cancellations. Air Products will continue to evaluate its project backlog but does not anticipate further material cancellations.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.