Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Air Products and Chemicals, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 4.6% to -3.8% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 64, DPO 52, DIO 28). At a 7.4% WACC with mid-year discounting, the terminal value (92% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 17.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $485.42 per share, suggesting APD is undervalued by 64.8% at the current price of $294.62.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 2,545 | 2,690 | 2,823 | 3,212 | 3,091 | 3,168 |
| (−) Net Interest | 186 | 196 | 206 | 234 | 226 | 231 |
| (+) D&A | 4,767 | 5,272 | 5,742 | 5,923 | 5,823 | 5,969 |
| EBITDA | 7,498 | 8,159 | 8,771 | 9,369 | 9,140 | 9,369 |
| (−) Tax | 479 | 507 | 532 | 605 | 582 | — |
| (−) CapEx | 4,989 | 5,275 | 5,535 | 6,297 | 6,060 | — |
| (−) ΔWC | -224 | 93 | 85 | 249 | -77 | — |
| Free Cash Flow (FCF) | 2,254 | 2,284 | 2,620 | 2,219 | 2,575 | — |
| Peers' EBITDA Multiple | 17.5x | |||||
| Terminal Value | 163,859 | |||||
| WACC / Discount Rate | 7.39% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,175 | 2,052 | 2,192 | 1,729 | 1,868 | 114,736 |
| Enterprise Value | 124,753 | |||||
| Projection Period | 10,016 | 8.0% | ||||
| Terminal Value | 114,736 | 92.0% | ||||
| (−) Current Net Debt | 16,550 | |||||
| Equity Value | 108,203 | |||||
| (÷) Outstanding Shares | 223M | |||||
| Fair Price | $485 | +64.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 13.5x | 15.5x | 17.5x | 19.5x | 21.5x |
|---|---|---|---|---|---|
| 5.4% | $409 | $474 | $538 | $603 | $668 |
| 6.4% | $388 | $449 | $511 | $573 | $634 |
| 7.4% | $368 | $427 | $485 | $544 | $603 |
| 8.4% | $349 | $405 | $461 | $517 | $574 |
| 9.4% | $331 | $384 | $438 | $492 | $545 |
Current price: $294.62. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.