Why you shouldn’t be buying Air Products & Chemicals stock

We believe there are a few things to fear in APD stock given its overall Weak operating performance and financial condition. But keeping in mind its Very High valuation, we think that the stock is Very Unattractive. Here is our multi-factor assessment.

But no matter how attractive, investing in a single stock carries high risk. Trefis High Quality Portfolio and is designed to reduce stock-specific risk while giving upside exposure

Let’s get into details of each of the assessed factors but before that, for quick background: With $65 Bil in market cap, Air Products & Chemicals provides atmospheric and specialty gases, equipment for air separation, hydrocarbon recovery, gas liquefaction, and hydrogen transport, with strategic collaboration on hydrogen compression systems.

[1] Valuation Looks Very High

This table highlights how APD is valued vs broader market. For more details see: APD Valuation Ratios

[2] Growth Is Very Weak

• Air Products & Chemicals has seen its top line grow at an average rate of 2.3% over the last 3 years
• Its revenues have fallen -1.1% from $12 Bil to $12 Bil in the last 12 months
• Also, its quarterly revenues declined -0.5% to $2.9 Bil in the most recent quarter from $2.9 Bil a year ago.

This table highlights how APD is growing vs broader market. For more details see: APD Revenue Comparison

[3] Profitability Appears Strong

• APD last 12 month operating income was $2.9 Bil representing operating margin of 24.1%
• With cash flow margin of 27.9%, it generated nearly $3.4 Bil in operating cash flow over this period
• For the same period, APD generated nearly $1.5 Bil in net income, suggesting net margin of about 12.8%

This table highlights how APD profitability vs broader market. For more details see: APD Operating Income Comparison

[4] Financial Stability Looks Moderate

• APD Debt was $16 Bil at the end of the most recent quarter, while its current Market Cap is $65 Bil. This implies Debt-to-Equity Ratio of 25.5%
• APD Cash (including cash equivalents) makes up $1.6 Bil of $39 Bil in total Assets. This yields a Cash-to-Assets Ratio of 4.1%

[4] Downturn Resilience Is Moderate

APD saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• APD stock fell 30.5% from a high of $314.27 on 10 November 2021 to $218.27 on 14 March 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 2 December 2022
• Since then, the stock increased to a high of $338.07 on 3 February 2025 , and currently trades at $290.22

 
2020 Covid Pandemic

• APD stock fell 31.0% from a high of $256.01 on 14 February 2020 to $176.73 on 23 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 7 July 2020

 
2008 Global Financial Crisis

• APD stock fell 60.7% from a high of $106.03 on 5 June 2008 to $41.65 on 20 November 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 25 July 2013

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