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Air Products & Chemicals' stock faces bearish sentiment despite annual growth

Published Nov 08, 2023 17:34
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Air Products (NYSE:APD) & Chemicals Inc. (NYSE: APD) stock recently traded at $254.46, marking a 12.65% decrease from the previous close, resulting in a market cap of $56.53B. This follows the company's mixed Q4 FY2023 results, which saw a 13% fall in the stock price due to lower energy charges to end-users, offset by price increases and currency movements.

Q4 revenues were reported at $3.19 billion, a 10.6% YoY decrease that underperformed the consensus estimate, marking the third miss in four quarters. Sales fell across the Americas, Asia, and Europe with significant volume decline in Asia due to China's slow recovery and weak electronics market demand.

Despite these challenges, APD's adjusted earnings rose by 11% YoY to $3.15 per share, outperforming ' expectations. Non-GAAP operating income grew by 5.5% YoY to $738.60 million, and non-GAAP net income attributable to Air Products increased by 12.4% from the prior year’s quarter to $2.56 billion.

The company predicts fiscal Q1 adjusted EPS between $2.90 and $3.05 and Fiscal 2024 earnings between $12.80 and $13.10, indicating a 13% growth at the midpoint from Fiscal 2023. Analysts forecast a slight YoY revenue increase of 0.5% to $3.19 billion and a 13.1% rise in EPS to $2.98 for Q1 FY2024.

APD’s FY2024 revenue and EPS are anticipated to increase by 7.2% and 12.8% YoY to $13.50 billion and $12.98, respectively.

Despite revenue shortfalls, APD raised its dividend for the 41st consecutive year, increasing the quarterly dividend by 8% to $1.75 per share in January. The company's annual dividend yield is 2.92% with an annual dividend per share of 7.43.

APD's shares have underperformed year-to-date, down by 17%, and have also decreased by 9.4% over the past month, a 13.9% decline over six months. However, within its industry, APD's shares have shown resilience with an annual growth rate of 10.18%. Despite the recent downturn, analysts project a high stock price of $380.00 and a low of $285.00 for APD.

The company has an Overweight consensus rating and is expected to have earnings per share of $3.12 for the current quarter.

On November 6th, APD announced plans for a carbon capture facility in Rotterdam, expected to be operational by 2026 and serve ExxonMobil’s refinery and other customers. On October 30th, it committed to supplying two MCGE replacements for the PETRONAS LNG Complex in Malaysia.

Total liabilities stood at $16.34 billion as of September 30, 2023. The stock’s trailing 12-month EBITDA margin of 32.52% is significantly higher than the industry average.

Major shareholders include insiders (0.38%) and institutional investors (85.86%), with Vanguard Group Inc. and Blackrock (NYSE:BLK) Inc. being the largest.

The company's short interest cover period is 2.03 days, indicating bearish sentiment among investors. APD's year-over-year earnings growth rate has been positive at 12.68% over the past five years, but analysts predict a drop in current quarter sales by -6.20%. Despite these challenges, to meet the consensus price target of $326.20, the stock needs a 21.99% increase.

APD’s trailing 12-month gross profit margin of 29.90% is higher than the industry average, as is its net income margin of 18.26%. However, the stock’s trailing 12-month asset turnover ratio of 0.43x is lower than the industry average, indicating a potential concern for investors considering APD's elevated valuation.

InvestingPro Insights

Drawing from InvestingPro data, Air Products & Chemicals Inc. (APD) boasts a robust market cap of 56.46B USD and a P/E ratio of 24.41, indicating a significant market presence and a potentially attractive investment for those focused on earnings growth. The company's revenue as of Q3 2023 was reported at 12978.7M USD, showing considerable financial strength.

It's worth noting a couple of InvestingPro Tips for potential investors. Firstly, APD has a track record of maintaining its dividend payments, having raised its dividend for 40 consecutive years. This could be a strong draw for income-focused investors. Secondly, despite some volatility, APD's stock generally trades with low price volatility and stockholders receive high returns on book equity. This suggests that APD could provide a stable investment with a good return for those with a long-term investment horizon.

In conclusion, despite some recent challenges, APD's strong financial metrics and consistent dividend payments, as highlighted by InvestingPro, suggest a potentially attractive investment opportunity. For more detailed insights and tips, consider exploring the full range of services offered by InvestingPro.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Air Products & Chemicals' stock faces bearish sentiment despite annual growth
 

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