After taking a fresh look at industrial gas firms, we are upgrading our moat ratings for Air Liquide, Air Products, and Linde to wide from narrow, based on switching costs and intangible assets. The moat upgrade boosts our fair value estimates to EUR 185 from EUR 162 for Air Liquide, to $307 from $288 for Air Products, and to $425 from $398 for Linde.
Air Products is poised for rapid growth due to business opportunities that drive its ambitious $30 billion capital allocation plan.
After Air Liquide’s 2016 acquisition of Airgas and the Praxair-Linde merger in 2018, Air Products is a distant third in terms of market share among industrial gas majors and may struggle to regain share.
|
Metric
|
APD
|
PPG
|
LIN
|
|---|---|---|---|
Price/Earnings (Normalized) | 20.15 | 17.41 | 31.45 |
Price/Book Value | 3.50 | 4.01 | 5.43 |
Price/Sales | 4.20 | 1.74 | 6.70 |
Price/Cash Flow | 14.62 | 15.10 | 22.48 |
|
Metric
|
APD
|
PPG
|
LIN
|
|---|---|---|---|
Quick Ratio | 1.52 | 0.96 | 0.62 |
Current Ratio | 1.81 | 1.47 | 0.80 |
Interest Coverage | 16.38 | 7.51 | 19.83 |
|
Metric
|
APD
|
PPG
|
LIN
|
|---|---|---|---|
Return on Assets (Normalized) | 8.41% | 8.42% | 8.80% |
Return on Equity (Normalized) | 18.26% | 24.67% | 17.60% |
Return on Invested Capital (Normalized) | 10.72% | 12.67% | 11.96% |
|
Ticker
|
Name
|
Morningstar Rating for Stocks
|
Capital Allocation
|
Economic Moat
|
Market Cap
|
|---|---|---|---|---|---|
LIN
| Linde PLC | Xpxthftxr | Zhpg | $215.3 Bil | |
SHW
| Sherwin-Williams Co | Tzfhnhkh | Rxxc | $77.7 Bil | |
ECL
| Ecolab Inc | Vfmzgglrhk | Wzyf | $62.7 Bil | |
LYB
| LyondellBasell Industries NV Class A | Hjcrplzp | Jgjlg | $32.3 Bil | |
DD
| DuPont de Nemours Inc | Mwyxfjsw | Wqczqkm | $30.9 Bil | |
PPG
| PPG Industries Inc | Cdggdmhcn | Vzsnq | $30.8 Bil | |
IFF
| International Flavors & Fragrances Inc | Lyssrngnq | Xqzpp | $21.7 Bil | |
ALB
| Albemarle Corp | Jxvrplwbj | Gmybd | $13.2 Bil | |
SQM
| Sociedad Quimica Y Minera De Chile SA ADR | Fhgzfpfqc | Lkjmk | $12.6 Bil |
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