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How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Air Products and Chemicals (APD) ten years ago? It may not have been easy to hold on to APD for all that time, but if you did, how much would your investment be worth today?
Air Products and Chemicals' Business In-Depth
With that in mind, let's take a look at Air Products and Chemicals' main business drivers.
Pennsylvania-based Air Products and Chemicals Inc. makes industrial gases as well as a variety of polymer and performance chemicals. It also supplies processing equipment. Air Products' reporting segments are as follows:
Industrial Gases – Americas (41% of fiscal 2020 sales), Industrial Gases – Europe, Middle East, and Africa/EMEA (22%) and Industrial Gases – Asia (31%) segments include the results of the company’s regional industrial gases businesses. These businesses sell atmospheric gases such as oxygen, nitrogen and argon and processes gases to a number of industries. Process gases such as carbon di oxide, helium, hydrogen, etc. are produced by other methods that exclude air separation. The largest cost component of the atmospheric gases is electricity.
The Americas segment operates through more than 400 distribution and production facilities in the South and North America. The EMEA division operates through 180 distribution and production facilities in the Europe, Middle East and Africa. The Asia unit operates from more than 170 facilities in the region.
The Industrial Gases – Global (4%) division designs and manufactures cryogenic and gas-processing equipment for air separation. It has majority or fully-owned subsidiaries in Canada, Asian countries, European countries, Latin American countries, African countries and in the Middle East.
The Corporate and other (2%) segment includes Air Products’ liquefied natural gas (LNG) sale of equipment business and helium storage and distribution vessel sale of equipment business, the polyurethane intermediates (PUI) business which the company exited in early fiscal 2014 as well as corporate support functions that benefit all the divisions.
In February 2019, the company successfully achieved the mechanical completion of the world’s largest industrial gas complex in Jazan, Saudi Arabia. The industrial gas complex is expected to be onstream in phases in 2019. Notably, this is one of the largest projects executed by Air Products till date and demonstrates its engineering capabilities and expertise.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Air Products and Chemicals ten years ago, you're likely feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in May 2011 would be worth $3,370.01, or a 237% gain, as of May 18, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
In comparison, the S&P 500 gained 213.27% and the price of gold went up 19.99% over the same time frame.
Looking ahead, analysts are expecting more upside for APD.
Air Products’ adjusted earnings for the fiscal second quarter missed the Zacks Consensus Estimate while sales beat. Strategic investments in high-return projects, new business deals and acquisitions are expected to drive the company’s results in fiscal 2021. Also, Air Products is committed to maximize returns to shareholders. It will also benefit from productivity actions. The acquisition of PBF Energy plants is also contributing to its results. However, it faces challenges from lower merchant volumes in the Americas. Lower demand due to the impacts of the coronavirus pandemic are exerting pressure on volumes. Air Products also faces headwind from weakness in its packaged gas business in Europe. Its high debt level and stretched valuation are other concerns. Moreover, the company has underperformed the industry over the past year.
The stock is up 6.07% over the past four weeks, and no earnings estimate has gone lower in the past two months, compared to 3 higher, for fiscal 2021. The consensus estimate has moved up as well.
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Air Products and Chemicals, Inc. (APD) : Free Stock Analysis Report
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