Is Air Products & Chemicals, Inc. (APD) Bill Ackman’s Big Target?

Air Products & Chemicals, Inc. (NYSE:APD) is valued more expensively than its peer, Airgas, Inc. (NYSE:ARG). Airgas, Inc. (NYSE:ARG) is trading at $100.30 per share, with the total market cap of around $7.35 billion. The market values Airgas, Inc. (NYSE:ARG) at 10.90 times its trailing EBITDA. Airgas is the leader in the U.S. packaged gas market, having the broadest geographic footprint, with around 1,100 locations including 900 branches and 300 cylinder fill plants. The company has quite a diverse customer base, with the largest customer accounting for only 0.5% of its total revenue.

The company reported that its operating results would be quite favorable in the future, along with the U.S. early stage of recovery. Moreover, it will streamline the supply chain, improve operational efficiencies and optimize sales channels for all customers. For the full year 2014, the company expects to grow its diluted EPS by 15%-18%, from $4.35 to a range of $5.00 – $5.15. The company offers a lower dividend yield than Air Products & Chemicals, Inc. (NYSE:APD), at only 1.90%.

My Foolish take

The rumor of Bill Ackman’s activism on Air Products & Chemicals, Inc. (NYSE:APD) is pure speculation. Despite the recent announcement of a shareholder plan, I also do not think that the company is Bill Ackman’s target either. Of course, I might be wrong though. However, with the high valuation and the cyclical business, I personally would not come in Air Products at its current trading price.

The article Is Air Products Bill Ackman’s Big Target? originally appeared on Fool.com and is written by Anh Hoang.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends FedEx. Anh is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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