Price to Operating Profit (P/OP)
since 2005
Calculation
Air Products & Chemicals Inc., P/OP, long-term trends, calculation
| P/OP | = | Share price1, 2, 3 | ÷ | Operating profit per share1 | Operating profit per share1 | = | Operating income1 (in thousands) |
÷ | No. shares of common stock outstanding2 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Nov 19, 2020 | 26.71 | = | 270.36 | ÷ | 10.12 | 10.12 | = | 2,237,600 | ÷ | 221,026,592 | |
| Nov 26, 2019 | 24.10 | = | 234.40 | ÷ | 9.73 | 9.73 | = | 2,144,400 | ÷ | 220,433,925 | |
| Nov 20, 2018 | 17.60 | = | 157.56 | ÷ | 8.95 | 8.95 | = | 1,965,600 | ÷ | 219,533,532 | |
| Nov 16, 2017 | 24.68 | = | 161.18 | ÷ | 6.53 | 6.53 | = | 1,427,600 | ÷ | 218,618,346 | |
| Nov 21, 2016 | 14.42 | = | 139.74 | ÷ | 9.69 | 9.69 | = | 2,106,000 | ÷ | 217,375,097 | |
| Nov 24, 2015 | 17.68 | = | 139.47 | ÷ | 7.89 | 7.89 | = | 1,699,100 | ÷ | 215,426,569 | |
| Nov 24, 2014 | 21.53 | = | 133.82 | ÷ | 6.21 | 6.21 | = | 1,328,200 | ÷ | 213,710,798 | |
| Nov 26, 2013 | 17.36 | = | 108.85 | ÷ | 6.27 | 6.27 | = | 1,324,400 | ÷ | 211,275,654 | |
| Nov 20, 2012 | 13.55 | = | 81.61 | ÷ | 6.02 | 6.02 | = | 1,282,400 | ÷ | 212,850,078 | |
| Nov 22, 2011 | 10.22 | = | 78.80 | ÷ | 7.71 | 7.71 | = | 1,622,200 | ÷ | 210,464,383 | |
| Nov 23, 2010 | 13.05 | = | 84.57 | ÷ | 6.48 | 6.48 | = | 1,389,000 | ÷ | 214,275,258 | |
| Nov 25, 2009 | 20.85 | = | 83.34 | ÷ | 4.00 | 4.00 | = | 846,300 | ÷ | 211,705,911 | |
| Nov 26, 2008 | 6.51 | = | 46.50 | ÷ | 7.14 | 7.14 | = | 1,495,800 | ÷ | 209,566,838 | |
| Nov 28, 2007 | 14.81 | = | 96.78 | ÷ | 6.54 | 6.54 | = | 1,407,700 | ÷ | 215,386,799 | |
| Dec 13, 2006 | 14.68 | = | 71.79 | ÷ | 4.89 | 4.89 | = | 1,060,900 | ÷ | 216,936,873 | |
| Nov 22, 2005 | 13.39 | = | 60.43 | ÷ | 4.51 | 4.51 | = | 1,002,500 | ÷ | 222,106,958 |
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), 10-K (reporting date: 2014-09-30), 10-K (reporting date: 2013-09-30), 10-K (reporting date: 2012-09-30), 10-K (reporting date: 2011-09-30), 10-K (reporting date: 2010-09-30), 10-K (reporting date: 2009-09-30), 10-K (reporting date: 2008-09-30), 10-K (reporting date: 2007-09-30), 10-K (reporting date: 2006-09-30), 10-K (reporting date: 2005-09-30).
1 US$
2 Data adjusted for splits and stock dividends.
3 Closing price as at the filing date of Air Products & Chemicals Inc. Annual Report.
An analysis of the financial trajectory between 2005 and 2020 reveals a significant expansion in market valuation relative to operating performance. While both the share price and operating profit per share experienced long-term growth, the pace of share price appreciation consistently outstripped the growth of operating profits, leading to a general increase in the Price to Operating Profit (P/OP) multiple.
- Share Price Evolution
- The share price exhibited a strong upward trajectory, rising from 60.43 US$ in 2005 to 270.36 US$ by 2020. A notable period of volatility occurred between 2007 and 2009, where the price dropped sharply from 96.78 US$ to 46.50 US$ in 2008 before recovering to 83.34 US$ in 2009. Following this period, the price entered a phase of sustained growth, particularly accelerating after 2018.
- Operating Profit Per Share Trends
- Operating profit per share grew from 4.51 US$ in 2005 to 10.12 US$ in 2020. This growth was characterized by intermittent fluctuations rather than a linear ascent. Significant contractions are observed in 2009 (4.00 US$) and 2017 (6.53 US$), though the overall trend indicates an improvement in the company's operational earning capacity over the fifteen-year period.
- Price to Operating Profit (P/OP) Ratio Analysis
- The P/OP ratio transitioned from a historical baseline of approximately 13x to 15x in the mid-2000s to a significantly higher valuation range toward the end of the period. The most extreme volatility in the ratio occurred during the 2008-2009 window; the ratio collapsed to 6.51 in 2008 due to the precipitous drop in share price, then surged to 20.85 in 2009 as the share price recovered while operating profits remained depressed.
- Long-term Valuation Shift
- From 2013 onward, a structural shift in valuation is evident. The P/OP ratio moved consistently above the 17x mark, peaking at 26.71 in 2020. This trend suggests an increase in investor confidence or a shift in market expectations, as the market began assigning a higher premium to each dollar of operating profit generated by the company compared to the 2005-2012 period.
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Comparison to Competitors
Air Products & Chemicals Inc., P/OP, long-term trends, comparison to competitors
| Air Products & Chemicals Inc. | Linde plc | |
|---|---|---|
| Nov 19, 2020 | 26.71 | 39.58 |
| Nov 26, 2019 | 24.10 | 36.01 |
| Nov 20, 2018 | 17.60 | 16.21 |
| Nov 16, 2017 | 24.68 | 17.56 |
| Nov 21, 2016 | 14.42 | 15.33 |
| Nov 24, 2015 | 17.68 | 12.50 |
| Nov 24, 2014 | 21.53 | 14.24 |
| Nov 26, 2013 | 17.36 | 14.25 |
| Nov 20, 2012 | 13.55 | 13.64 |
| Nov 22, 2011 | 10.22 | 13.18 |
| Nov 23, 2010 | 13.05 | 14.13 |
| Nov 25, 2009 | 20.85 | 14.78 |
| Nov 26, 2008 | 6.51 | 9.67 |
| Nov 28, 2007 | 14.81 | 14.77 |
| Dec 13, 2006 | 14.68 | 13.01 |
| Nov 22, 2005 | 13.39 | 13.69 |
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), 10-K (reporting date: 2014-09-30), 10-K (reporting date: 2013-09-30), 10-K (reporting date: 2012-09-30), 10-K (reporting date: 2011-09-30), 10-K (reporting date: 2010-09-30), 10-K (reporting date: 2009-09-30), 10-K (reporting date: 2008-09-30), 10-K (reporting date: 2007-09-30), 10-K (reporting date: 2006-09-30), 10-K (reporting date: 2005-09-30).