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1. Company Snapshot

1.a. Company Description

Air Products and Chemicals, Inc.provides atmospheric gases, process and specialty gases, equipment, and services worldwide.The company produces atmospheric gases, including oxygen, nitrogen, and argon; process gases, such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas; specialty gases; and equipment for the production or processing of gases comprising air separation units and non-cryogenic generators for customers in various industries, including refining, chemical, gasification, metals, manufacturing, food and beverage, electronics, magnetic resonance imaging, energy production and refining, and metals.


It also designs and manufactures equipment for air separation, hydrocarbon recovery and purification, natural gas liquefaction, and liquid helium and liquid hydrogen transport and storage.Air Products and Chemicals, Inc.has a strategic collaboration with Baker Hughes Company to develop hydrogen compression systems.


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

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1.b. Last Insights on APD

Air Products and Chemicals' recent performance was driven by strong Q1 2026 earnings, beating estimates with $3.16 EPS, up 10% year-over-year. Sales rose 5.8% due to gains across regions, while lower costs lifted margins. The company's adjusted operating income increased 12%, and operating margin reached 24.4%. Analysts raised their forecasts following the upbeat Q1 results. With a strong balance sheet, 2.7% dividend yield, and clean hydrogen exposure, APD is poised for growth. Rated a 'Buy' by growth investors, the company focuses on risk-adjusted returns and long-term offtake agreements.

1.c. Company Highlights

2. Air Products' Q1 Fiscal 2026 Earnings: A Strong Start to the Year

Air Products reported a robust first quarter fiscal 2026, with adjusted operating income rising 12% year-over-year, driven by the company's focus on its core industrial gas business. Earnings per share (EPS) came in at $3.16, surpassing estimates of $3.04, representing a 10% increase from the prior year. The operating margin was 24.4%, and return on capital was 11%. Revenue growth was driven by pricing actions, productivity, and new asset contributions, which more than offset the negative impact of lower helium sales.

Publication Date: Feb -04

📋 Highlights
  • Financial Performance:: Air Products reported a 12% increase in adjusted operating income and $3.16 EPS (+10% YoY), with an operating margin of 24.4% and return on capital of 11%.
  • Capital Discipline:: The company plans to reduce capital expenditures by $1 billion in fiscal 2026, maintaining total capex at $4 billion while targeting 7-9% EPS growth for the year.
  • Strategic Collaborations:: Air Products is advancing low-emission ammonia projects with Yara in Saudi Arabia and the US, alongside optimizing large projects and deconsolidating the Neom joint venture (expected in mid-2027).
  • Shareholder Returns:: Generated $400 million in shareholder returns (dividends/share repurchases) in Q1, with a net debt-to-EBITDA ratio of 2.2x, reflecting strong cash flow from core operations.
  • Market Opportunities:: The space industry is projected to grow 6-7% annually, with Air Products holding 40-50% US market share, while AI-driven efficiency gains aim to reduce power costs and enhance productivity.

Segment Performance and Outlook

The company's core industrial gas business continues to drive growth, with CEO Eduardo Menezes attributing the progress to project cancellations, headcount optimization, and asset rationalization. Air Products is affirming its full-year earnings guidance, implying a 7-9% improvement at the midpoint, driven by pricing actions, productivity, and new asset contributions. Menezes stated that the company expects results to come from "price and productivity improvements, similar to the first quarter."

Valuation and Growth Expectations

With a P/E Ratio of -185.58 and an EV/EBITDA of 55.89, the market appears to be pricing in significant growth expectations. Analysts estimate next year's revenue growth at 5.7%. The company's return on equity (ROE) is -2.2%, and the net debt-to-EBITDA ratio is 2.2x. Given the current valuation multiples, it is essential to monitor whether the company can deliver on its growth expectations.

Large Projects and Capital Allocation

Air Products is making strides to optimize its portfolio of large projects, including potential collaborations with Yara International on low-emission ammonia projects in Saudi Arabia and the US. The company is also focused on driving discipline in its capital allocation, with plans to reduce capital expenditures by approximately $1 billion in fiscal 2026. This reduction is expected to contribute to the company's efforts to maintain capital discipline.

Helium Sales and Pricing

The company is working to increase helium sales, particularly in the electronics sector. However, helium sales remain a headwind, with CFO Melissa Schaeffer noting that the sequential price change for helium was a 1% decrease globally. The company is seeing helium as a headwind, both to volume and price, but is working to mitigate this impact.

Future Prospects and AI-Related Productivity

Air Products is exploring opportunities to drive productivity through AI, with Menezes stating that benefits can accrue to the company's on-site business or be passed through to customers. The company is working to make its operations more efficient using AI, which can lead to long-term benefits for customers. However, it is challenging to determine what share of these benefits will go to customers.

3. NewsRoom

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Ironwood Investment Counsel LLC Makes New Investment in Air Products and Chemicals, Inc. $APD

Feb -07

Source: defenseworld.net

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Is Air Products and Chemicals (APD) Outperforming Other Basic Materials Stocks This Year?

Feb -06

Source: zacks.com

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Top 2 Materials Stocks That May Keep You Up At Night In February

Feb -05

Source: benzinga.com

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Air Products and Chemicals (APD) Crossed Above the 200-Day Moving Average: What That Means for Investors

Feb -04

Source: zacks.com

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Air Products and Chemicals: Not Too Late To Buy Now

Feb -03

Source: seekingalpha.com

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

Feb -03

Source: defenseworld.net

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

Feb -03

Source: defenseworld.net

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Air Products Analysts Increase Their Forecasts Following Upbeat Q1 Results

Feb -02

Source: benzinga.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

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

6. Segments

Americas

Expected Growth: 6.5%

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

Asia

Expected Growth: 8.0%

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

Europe

Expected Growth: 5.5%

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

Middle East and India

Expected Growth: 7.5%

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

Corporate and Other

Expected Growth: 4.0%

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

7. Detailed Products

Industrial Gases

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

Process Gases

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

Electronics Gases

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

Performance Materials

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

Equipment and Services

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

LNG (Liquefied Natural Gas) Technology

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

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

Forces Ranking

Threat Of Substitutes

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

Bargaining Power Of Customers

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

Bargaining Power Of Suppliers

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

Threat Of New Entrants

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

Intensity Of Rivalry

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

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

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

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

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Ecolab

A-Score: 5.2/10

Value: 1.2

Growth: 5.1

Quality: 6.2

Yield: 2.0

Momentum: 7.0

Volatility: 10.0

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Stock-Card
PPG

A-Score: 5.0/10

Value: 4.0

Growth: 2.8

Quality: 6.5

Yield: 5.0

Momentum: 3.0

Volatility: 8.7

1-Year Total Return ->

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Sherwin-Williams

A-Score: 4.9/10

Value: 1.7

Growth: 6.4

Quality: 6.0

Yield: 2.0

Momentum: 4.0

Volatility: 9.3

1-Year Total Return ->

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Stock-Card
Air Products

A-Score: 4.4/10

Value: 4.8

Growth: 2.9

Quality: 2.1

Yield: 6.0

Momentum: 2.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
IFF

A-Score: 4.4/10

Value: 5.4

Growth: 2.3

Quality: 3.1

Yield: 6.0

Momentum: 2.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
DuPont

A-Score: 3.5/10

Value: 6.9

Growth: 3.7

Quality: 3.7

Yield: 4.0

Momentum: 0.5

Volatility: 2.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

283.12$

Current Price

283.12$

Potential

-0.00%

Expected Cash-Flows