QS Research · Michael Burry's Scion Capital analyst template · 2006
Air Products & Chemicals, Inc. (APD)
As of 2026-11-11 · 11/15 boxes filled from SEC filings and market data
Report price $312.25 (close 2026-11-10)
Conclusion: WATCH
Conviction low · base case none · downside -32% · upside +57%
The market is treating APD as a broken clean-energy story: TTM GAAP EBIT is -$593.1M and net income -$47.3M (N13, N16) because of a -$3.72B restructuring charge (N31), while the underlying business earned $3.68B adjusted (N32) and FY2026 adjusted EPS rose 12% to $13.45 with FY2027 guided to $14.15-$14.50 (S101). On the $14.325 midpoint, today's 18.9x adjusted P/E (N33) gives $270.74, the CRS 25.9x gives $371.02 and the LIN 34.2x gives $489.92, i.e. -13.3% / +18.8% / +56.9% versus the $312.25 close (N1). The base case is only +18.8% at the independent anchor and the downside is -13.3%, so the rule is not met; the stock is a watch, not a long, because the quality gate fails (ROIC -3.6% vs WACC 7.3%, N38/N39; quality score 8/100, N47) and the capex/EBITDA of 512% (N41) rules out EV/EBITDA. The re-rating lever is dated and real — the 2026-11-05 release's FY2027 guide and the capex cut to $3.0-$3.5B (S101) — but at 21.8x forward the price already discounts part of it.
Key numbers
- Share price: $312.25
- Market cap: $69.53B
- Latest financial period: TTM to Jun 30, 2026
- Revenue (TTM): $12.60B
- EV / EBITDA (TTM): 72.2x
- Price / book: 5.01x
- Earnings-quality flags (TTM): Restructuring charges -$3.72B (7874% of net income)
- P/E, adjusted (TTM): 18.9x
- Revenue growth (latest fiscal year): -0.5%
- ROIC (TTM): -3.6%
- WACC: 7.3%
- Economic profit spread: -10.9 pts
- EV / EBITDA sanity: outside the sector range
The 15 boxes
- ✓ 1. Long-form business notes
APD is a 1940-founded industrial gases company that earns most of its money selling gases rather than equipment: regional industrial gases were over 90% of consolidated sales in FY2025, FY2024 and FY2023, roughly half of that atmospheric gases, and the on-site supply mode alone is about half of total company sales on 15- to 20-year contracts. Between the FY2020 10-K and the FY2025 10-K the portfolio narrowed — the separate 'Industrial Gases – Global' reporting segment is gone, the LNG process technology and equipment business was sold to Honeywell on 30 September 2024 (about $1.6 billion pre-tax gain booked in Q4 FY2024), and certain clean energy projects were exited in FY2025. Financial shape changed even more than the portfolio: revenue went from $8.86B in FY2020 to $12.04B in FY2025 (TTM to 2026-06-30 $12.60B) while capex went from $2.51B to $7.02B, cash fell from $5.25B to $1.86B, and FY2025 operating income was -$877.0M (-$593.1M on a TTM to 2026-06-30 basis).
- ○ 2. Competitive advantage
These sources show a global, capital-intensive industrial-gas business with roughly $12B of revenue and 60% of FY2025 sales outside the U.S., but they do not document a durable margin advantage. Reported operating income fell from $4.47B in FY2024 to -$877.0M in FY2025 and -$593.1M in the TTM to 2026-06-30, on revenue of $12.10B, $12.04B and $12.60B, respectively. No source names specific competitors or provides brand, switching-cost or license evidence, so competitive advantage is not proven here.
- ✓ 3. 10-Q takeaways
Q3 2026 (quarter ended 30 June 2026) was an operating gain wrapped in a headline loss: sales rose 5% to $3,161.0, adjusted operating income rose 9% to $810.3 (25.6% margin, +110 bp) and adjusted EPS rose 12% to $3.47, but GAAP reported an operating loss of $2,097.1 (negative 66.3% margin) and a loss per share of $6.47 because of $2.9 billion pre-tax project-exit charges booked in the quarter. Nine-month adjusted figures ($2,319.5 adjusted operating income, $9.84 adjusted EPS) confirm the underlying business is growing while GAAP earnings stay distorted by the clean-energy exits. Management raised FY2026 adjusted EPS guidance to $13.39–$13.49 and cut expected FY2026 capex to about $3.5 billion. Balance-sheet and cash items (inventory, cash, buybacks) are not in the supplied 10-Q excerpt, so they are not covered here.
- ✓ 4. Corporate governance
Filled; members read this box.
- ✓ 5. Overview of the prior 3 years of 8-K filings
Filled; members read this box.
- ✓ 6. Other significant filings
Filled; members read this box.
- ✓ 7. Chronology of significant news and events
Filled; members read this box.
- ✓ 8. Comparables valuation interpretation
Filled; members read this box.
- ✓ 9. Insider trading interpretation
Filled; members read this box.
- ○ 10. Earnings-call notes
- ○ 11. Impression of the shareholder letter
- ○ 12. Scuttlebutt overview
- ✓ 13. Valuation and risk/reward summary
Filled; members read this box.
- ✓ 14. Current price suppression and potential catalysts
Filled; members read this box.
- ✓ 15. Conclusions
The call above.
Sign in with a QuantSignals Premium or Gold plan to read every box: each point linked to the SEC filing it came from, the bull and bear case, and the comparables. QS Research powers the signals behind FST, our autonomous trading agent.