APD – Market expectations are for Uniform ROA to expand to record highs, but management has concerns about margins, investable cash flow, and volume improvements

• • • Air Products and Chemicals, Inc. (APD:USA)currently trades at historical highs relative to UAFRS-based (Uniform) Assets, with a 2.0x Uniform P/B, implying bullish expectations for the firm. However, management has concerns about margins, investable cash flow, and volume improvements
    • Specifically, management they may be downplaying concerns about their ROCE outlook, and may be downplaying concerns about potential margin headwinds related to their new projects. They may also have concerns about their current investable cash flow situation, and may lack confidence in the sustainability of increasing investable cash flow generation. Moreover, they may lack confidence in the sustainability of sales increases as a result of the contract termination and associated plant sale in Asia, and may also lack confidence in strong merchant sales continuing to lead to sales volume improvements in all three industrial gas regional segments