Air Products

Methodology

Air Products' industrial gases business provides stable, predictable earnings from long-term contracts and on-site gas supply to industrial customers. The company's recurring revenue model and oligopolistic market structure creates pricing discipline and visibility. This calculation works well given the utility-like characteristics in essential industrial gas supply, though major project investments can create near-term margin variability.

Methodology

Air Products typically commands premium PEG valuations reflecting the quasi-utility nature of industrial gases with modest but dependable growth. The company's combination of contracted volumes, pricing escalators, and new project development justifies higher multiples than cyclical materials companies. Compare to Linde and Air Liquide to assess whether Air Products' project pipeline and margin profile warrant its current premium within the oligopoly.

Methodology

Air Products' consistent dividend increases combined with modest yield makes PEGY relevant for income-oriented industrial investors. The company's long-term contracts generate predictable cash flows supporting both dividends and large-scale hydrogen and gas project investments. PEGY better captures the total return proposition, where stable dividends complement modest growth from new industrial gas capacity additions.