Air Products & Chemicals Inc., FCFE calculation

US$ in thousands

12 months ended:	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015
Net income attributable to Air Products	1,886,700)	1,760,000)	1,497,800)	3,000,400)	631,100)	1,277,900)
Net income attributable to noncontrolling interests	44,400)	49,400)	35,100)	20,800)	30,400)	39,700)
Net noncash charges	1,373,700)	1,185,800)	1,287,200)	(535,100)	2,066,000)	901,400)
Working capital changes that provided (used) cash, excluding effects of acquisitions	(40,100)	(25,300)	(265,400)	48,000)	(20,100)	218,800)
Cash provided by operating activities	3,264,700)	2,969,900)	2,554,700)	2,534,100)	2,707,400)	2,437,800)
Additions to plant and equipment, including long-term deposits	(2,509,000)	(1,989,700)	(1,568,400)	(1,039,700)	(1,055,800)	(1,614,800)
Long-term debt proceeds	4,895,800)	—)	500)	2,400)	948,700)	338,800)
Payments on long-term debt	(406,600)	(428,600)	(418,700)	(483,900)	(485,000)	(708,700)
Net increase (decrease) in commercial paper and short-term borrowings	(54,900)	3,900)	(78,500)	(798,600)	(144,200)	284,000)
Free cash flow to equity (FCFE)	5,190,000)	555,500)	489,600)	214,300)	1,971,100)	737,100)

Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

The analysis of the annual financial data reveals notable trends in cash flow metrics over the six-year period ending September 30, 2020.

Cash Provided by Operating Activities: The cash inflows from operating activities demonstrate a generally upward trajectory with fluctuations. Starting at US$2,437,800 thousand in 2015, the figure increased to US$2,707,400 thousand in 2016, reflecting a strong year-over-year growth. In 2017 and 2018, cash provided by operating activities slightly declined and stabilized around US$2,534,100 thousand and US$2,554,700 thousand, respectively. However, a resurgence is observed in 2019 and 2020, reaching US$2,969,900 thousand and further increasing to US$3,264,700 thousand, which represents the highest value in the period under review. This indicates improving operational efficiency or favorable business conditions in the later years.
Free Cash Flow to Equity (FCFE): The free cash flow to equity displays significant volatility across the years. It started at US$737,100 thousand in 2015, surged dramatically to US$1,971,100 thousand in 2016, but then dropped sharply to US$214,300 thousand in 2017. This was followed by a moderate recovery to US$489,600 thousand in 2018 and a slight increase to US$555,500 thousand in 2019. The most remarkable change occurs in 2020, where FCFE escalates to US$5,190,000 thousand, a substantial increase compared to all previous years. This exceptional rise may indicate significant changes in financing activities, debt management, or capital expenditure patterns affecting the free cash flow available to equity holders.

In summary, operating cash flow has shown a steady increase over time with minor fluctuations, highlighting consistent operational performance. Meanwhile, FCFE’s high variability suggests episodic changes in financial policies or investments impacting the free cash flow accessible to shareholders, culminating in an exceptional peak in the last reported year.

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Air Products & Chemicals Inc., current P/FCFE calculation, comparison to benchmarks

No. shares of common stock outstanding	221,364,660
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)	5,190,000)
FCFE per share	23.45
Current share price (P)	275.75
Valuation Ratio
P/FCFE	11.76
Benchmarks
P/FCFE, Competitors¹
Linde plc	28.93
Sherwin-Williams Co.	21.61

Based on: 10-K (reporting date: 2020-09-30).

¹ Click competitor name to see calculations.

If the company P/FCFE is lower then the P/FCFE of benchmark then company is relatively undervalued.
Otherwise, if the company P/FCFE is higher then the P/FCFE of benchmark then company is relatively overvalued.

Air Products & Chemicals Inc., historical P/FCFE calculation, comparison to benchmarks

	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015
No. shares of common stock outstanding¹	221,026,592	220,433,925	219,533,532	218,618,346	217,375,097	215,426,569
Selected Financial Data (US$)
Free cash flow to equity (FCFE) (in thousands)²	5,190,000)	555,500)	489,600)	214,300)	1,971,100)	737,100)
FCFE per share³	23.48	2.52	2.23	0.98	9.07	3.42
Share price^1, 4	270.36	234.40	157.56	161.18	139.74	139.47
Valuation Ratio
P/FCFE⁵	11.51	93.01	70.65	164.43	15.41	40.76
Benchmarks
P/FCFE, Competitors⁶
Linde plc	—	—	—	—	—	—
Sherwin-Williams Co.	—	—	—	—	—	—

Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

¹ Data adjusted for splits and stock dividends.

² See details »

³ 2020 Calculation
FCFE per share = FCFE ÷ No. shares of common stock outstanding
= 5,190,000,000 ÷ 221,026,592 = 23.48

⁴ Closing price as at the filing date of Air Products & Chemicals Inc. Annual Report.

⁵ 2020 Calculation
P/FCFE = Share price ÷ FCFE per share
= 270.36 ÷ 23.48 = 11.51

⁶ Click competitor name to see calculations.

The financial data reveals several notable trends over the six-year period ending in 2020. The share price exhibited an overall upward trajectory, increasing from $139.47 in 2015 to $270.36 in 2020. Although there were fluctuations within the interval, particularly a peak in 2019 at $234.40 followed by further growth in 2020, the general trend was positive.

Free Cash Flow to Equity (FCFE) per share displayed significant volatility. Starting at $3.42 in 2015, it surged to $9.07 in 2016, then dropped sharply to $0.98 in 2017. Subsequent years showed gradual recovery with values of $2.23 in 2018 and $2.52 in 2019, culminating in a remarkable increase to $23.48 in 2020. This pattern indicates considerable fluctuations in the company’s capacity to generate cash available to equity shareholders, with particularly strong cash flow performance in the last reported year.

The Price-to-Free Cash Flow to Equity (P/FCFE) ratio reflected these underlying changes in FCFE per share relative to the share price. Initially, the ratio was relatively high at 40.76 in 2015, then it declined to 15.41 in 2016, coinciding with the FCFE spike. However, the ratio escalated dramatically to 164.43 in 2017 and remained elevated at 70.65 in 2018 and 93.01 in 2019, corresponding with the period of reduced FCFE. In 2020, the ratio fell sharply to 11.51, which aligns with the surge in FCFE per share and the increase in share price. This suggests an improved valuation metric from a cash flow perspective in the most recent year.

Share Price Trend: Consistent growth from 2015 to 2020 with some fluctuations, doubling over the period.
FCFE per Share Trend: Highly volatile with a low point in 2017 but a significant surge in 2020 indicating strengthened cash generation.
P/FCFE Ratio Trend: Fluctuated widely, peaking during periods of low FCFE, with a notable decrease in 2020 reflecting improved valuation.

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Air Products & Chemicals Inc. (NYSE:APD)

Price to FCFE (P/FCFE)

Free Cash Flow to Equity (FCFE)

Price to FCFE Ratio, Current

Price to FCFE Ratio, Historical