Is Air Products and Chemicals Stock Underperforming the S&P 500?

Allentown, Pennsylvania-based Air Products and Chemicals, Inc. (APD) provides atmospheric gases, process and specialty gases, equipment, and related services. Valued at $67.1 billion by market cap, the company develops, engineers, builds, owns, and operates some of the world's largest industrial gas projects, including gasification projects for producing high-value power, fuels, and chemicals.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and APD perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the specialty chemicals industry. APD operates in over 50 countries, allowing it to tap into diverse markets and offer a wide range of products. The company's strong focus on research and development has led to technological advancements in areas like cryogenics and hydrogen fuel cells, giving it a competitive edge in the market. 

Despite its notable strength, APD slipped 4.3% from its 52-week high of $314.87, achieved on Jul. 6. Over the past three months, APD stock gained 6.5%, outperforming the S&P 500 Index’s ($SPX) 1.8% gains during the same time frame.

Shares of APD climbed 22% on a YTD basis, outperforming SPX’s YTD 12.8% gains. However, in the longer term, the stock rose 3.9% over the past 52 weeks, underperforming SPX’s 18.7% returns over the last year.

To confirm the bullish trend, APD has been trading above its 200-day moving average since late January, with slight fluctuations. The stock is trading above its 50-day moving average since late June.

APD underperformed primarily due to heavy capital expenditure burdens from its clean energy pivot, multi-billion-dollar project exit charges, and persistent top-line pricing headwinds. While higher underlying volumes, productivity gains, and favorable currency movements provided operational support, investor sentiment remained muted due to ongoing pricing pressure in helium. This decline in global helium pricing across key markets, including the Americas, Asia, and Europe weighed heavily on operating margins and offset broader pricing actions, dampening the stock's reaction even as the company delivered core operational beats.   

On Jul. 30, APD shares closed up more than 2% after reporting its Q3 results. Its revenue stood at $3.2 billion, up 4.6% year over year. The company’s adjusted EPS increased 12.3% from the year-ago quarter to $3.47. 

In the competitive arena of specialty chemicals, Linde plc (LIN) has lagged behind APD, with a 12% uptick on a YTD basis and 1.1% gains over the past 52 weeks.

Wall Street analysts are reasonably bullish on APD’s prospects. The stock has a consensus “Moderate Buy” rating from the 23 analysts covering it, and the mean price target of $339.68 suggests a potential upside of 12.7% from current price levels.

On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.