APD

Air Products & Chemicals Inc.

Industrial/Transportation


Presented:07/14/2020
Price:$280.99
Cap:$62.06B
Current Price:$323.23
Cap:$71.86B

Presented

Date07/14/2020
Price$280.99
Market Cap$62.06B
Ent Value$46.21B
P/E Ratio31.86x
Book Value$50.72
Div Yield1.78%
Shares O/S220.86M
Ave Daily Vol1,115,112
Short Int1.22%

Current

Price$323.23
Market Cap$71.86B
Air Products & Chemicals, Inc. engages in the manufacture and distribution of atmospheric gases. It operates through the following segments: Industrial Gases-Americas; Industrial Gases-EMEA (Europe, Middle East, and Africa); Industrial Gases-Asia; Industrial Gases-Global; and Corporate and Other. The Industrial Gases-America, EMEA and Asia segment markets and produces atmospheric gases such as oxygen, nitrogen, argon, and rare gases; process gases such as hydrogen, helium, carbon dioxide, carbon monoxide, syngas, and specialty gases; and equipment for the production and processing of gases such as air separation units and non-cryogenic generators. The Industrial Gases-Global segment comprises cryogenic and gas processing equipment for air separation. The Corporate and Other segment includes LNG equipment and helium storage and distribution sale of equipment businesses and corporate support functions. The company was founded by Leonard Parker Pool on September 30, 1940 and is headquartered in Allentown, PA.

Publicly traded companies mentioned herein: Air Products and Chemicals Inc (APD), Albemarle Corporation (ALB), Daimler AG (DAI GR), Ecolab Inc (ECL), Volvo AB (VOLVB SS)

Highlights

The presenter is long shares of Air Products and Chemicals Inc (APD), following the announcement that they’ve signed a JV with ACWA Power and NEOM to build a green hydrogen plant in Saudia Arabia. The new facility will be one of the largest plants of its size and should be a significant contributor to APD’s earnings, although this is a long tail project which won’t come on until 2025. Looking at the business today, the presenter describes it as a best-in-class business with low cyclicality, an unlevered balance sheet, and a path to double digit earnings growth for the next seven years. Based on these characteristics, he believes it should trade at a premium to Ecolab. Applying a 35x multiple to his 2021 EPS estimate of $10, the presenter has a target price of $350/share or ~25% upside with additional upside based on the green hydrogen opportunity. 

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Idea Discussion

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