Air Products & Chemicals, Inc. (APD): Should You Follow Bill Ackman Into This Materials Giant?

Airgas recently released its annual report, which showed that sales increased 4% year over year, with diluted earnings per share growing nearly 9%. However, the company struggled in its fiscal first-quarter, reporting flat sales and diluted EPS.

Airgas, Inc. (NYSE:ARG) guides investors to expect at least $5.00 per share in fiscal 2014 diluted EPS, meaning investors are paying slightly more than 20 times next year’s earnings.

For the most part, Praxair, Inc. (NYSE:PX) trades in-line with its industry competitors. The company brought in $3 billion in sales in its fiscal second quarter, representing 7% year over year growth. Diluted EPS, meanwhile, rose 5% from the year-ago second quarter.

Going forward, Praxair expects $6.00 in per-share earnings in the upcoming fiscal year. Again, we see a pattern: Praxair trades for 21 times trailing earnings and 20 times forward EPS.

I consider Air Products (and for that matter, rivals Airgas, Inc. (NYSE:ARG) and Praxair, Inc. (NYSE:PX) as well) to be fairly valued. Investors who already own these stocks will continue to receive solid dividends, along with strong dividend increases every year. Unfortunately, new buyers aren’t getting a great deal on the stock, which is why I’d advise investors to wait for a better price before pulling the trigger.

The article Should You Follow Bill Ackman Into This Materials Giant? originally appeared on and is written by Robert Ciura.

Robert Ciura has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Robert 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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