Morningstar Rating

Stock Research and Analysis

by Kwame Webb, CFA

Bulls Say

The 2008 downturn caused financial hardship for many independent packaged-gas suppliers, creating substantial opportunity for Airgas to make strategic acquisitions.
Airgas maintains more than 1,100 wholly owned locations to serve national accounts. Rival Praxair's network consists of only 700 locations, 300 of which are affiliated independents.
Each of Airgas' roughly 10 million packaged gas cylinders costs roughly $125 to purchase, yet generates $60 per year in rental fees. This leads to a 2.5-year payback period, compared with a 30-year accounting life and a 50-year service life. Read more 

Bears Say

Airgas' price increases have historically been enacted later and carried a lower percentage increase than those implemented by its main rivals.
Roughly half of Airgas' sales are tied to the industrial manufacturing and construction markets. These areas are cyclical, and a U.S. downturn could hurt the company's results.
Depending on competitors for product supply is a very tenuous situation. While relations have yet to hit a sour note, it's possible the tide could turn against Airgas, making it hard for the firm to renegotiate new deals once the current contracts finally expire. Read more 

Management

We think Airgas has done a good job allocating shareholder capital. The firm has acquired more than 360 companies during the past three decades, and has incurred very few impairments over that time. More recently, Airgas was shrewd to acquire air separation   Read more 

Profile

After nearly 360 acquisitions in its 30-plus year history, Airgas is the largest U.S. distributor of industrial, medical, and specialty gases and hardgoods. The company   Read more 

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