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Air Products & Chemicals Inc APD

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Morningstar’s Analysis

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PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Air Products Announces $4.5 Billion Investment in Blue Hydrogen Project in Louisiana; Raising FVE

Analyst Note

| Krzysztof Smalec, CFA |

Narrow-moat-rated Air Products announced that it will invest $4.5 billion in a blue hydrogen complex in Louisiana, expected onstream in 2026. Based on Air Products’ return target of at least $0.10 of operating income per dollar of investment, we estimate that the project could contribute over $1.60 to the firm’s EPS when it becomes operational. We’ve raised our fair value estimate for Air Products to $330 from $316, which reflects the Louisiana project, a higher EPS contribution from Jazan (as the firm recently announced the closing of the acquisition), and time value of money. We see Air Products as modestly undervalued, with the stock trading roughly 13% below our updated fair value estimate.

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Company Profile

Business Description

Since its founding in 1940, Air Products has become one of the leading industrial gas suppliers globally, with operations in 50 countries and 19,000 employees. The company is the largest supplier of hydrogen and helium in the world. It has a unique portfolio serving customers in a number of industries, including chemicals, energy, healthcare, metals, and electronics. Air Products generated $8.9 billion in revenue in fiscal 2020.

Contact
7201 Hamilton Boulevard
Allentown, PA, 18195-1501
T +1 610 481-4911
Sector Basic Materials
Industry Specialty Chemicals
Most Recent Earnings Jun 30, 2021
Fiscal Year End Sep 30, 2021
Stock Type Cyclical
Employees 19,275

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