APD - Embedded Expectations Analysis - 2018 03 21
Air Products and Chemicals, Inc. (APD:USA) currently trades at historical highs relative to UAFRS-based (Uniform) Assets, with a 2.0x Uniform P/B, implying bullish expectations for the firm. However, management has concerns about margins, investable cash flow, and volume improvementsSpecifically, management they may be downplaying concerns about their
ROCE outlook, and may be downplaying concerns about potential margin headwinds related to their new projects. They may also have concerns about their current investable cash flow situation, and may lack confidence in the sustainability of increasing investable cash flow generation. Moreover, they may lack confidence in the sustainability of sales increases as a result of the contract termination and associated plant sale in Asia, and may also lack confidence in strong merchant sales continuing to lead to sales volume improvements in all three industrial gas regional segments
Air Products and Chemicals serves customers globally with a portfolio of products, services, and solutions that include atmospheric gases, process and other gases, equipment, and services. The company is a supplier of hydrogen and is engaged in helium and liquefied natural gas (LNG) process technology and equipment. The company also develops, engineers, builds, owns and operates industrial gas projects, including gasification projects that convert abundant natural resources into syngas for the production of power, fuels and chemicals. The company designs and manufactures equipment for air separation, hydrocarbon recovery and purification, LNG, and liquid helium and liquid hydrogen transport and storage.
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