Is L'Air Liquide's Growth in Sustainability Driving Its High Share Price in 2025?

Wondering if L'Air Liquide is really worth its price tag? You are not alone, as the stock's valuation continues to be a hot topic among investors seeking quality in the industrial gases sector. The stock has moved down 1.4% over the past week, is down 0.7% for the last month, but has delivered a solid 7.9% year-to-date and 5.0% in the past year, with an impressive 59.2% gain over the last five years. Recent headlines highlight L'Air Liquide's ongoing expansion efforts and its participation in major global sustainability initiatives. These activities are drawing more attention to the company's potential for steady long-term growth, helping to shape investor sentiment and possibly influencing the future direction of the stock. Right now, L'Air Liquide scores 0 out of 6 on our undervaluation checks. This means there is considerable discussion about how analysts are pricing this business. Let us examine the standard valuation approaches, and stay tuned for our insights on a smarter way to judge value at the end of this article.

L'Air Liquide scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: L'Air Liquide Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and then discounting them back to their present value. This allows investors to assess what the company could be worth today, based on expectations for its future performance.

L'Air Liquide currently produces Free Cash Flow of approximately €3.05 Billion. Analyst consensus provides annual cash flow projections for the next five years, and Simply Wall St extrapolates figures out to 2035. By 2029, Free Cash Flow is projected to increase to €4.08 Billion. These projections reflect a growth trajectory driven by both historical performance and anticipated future expansion in industrial gases and sustainability initiatives.

Using these projections, the DCF model for L'Air Liquide calculates an intrinsic share value of €140.48. However, this is 19.7% below the current share price. This implies the market is currently valuing the stock above what these cash flow estimates support.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests L'Air Liquide may be overvalued by 19.7%. Discover 849 undervalued stocks or create your own screener to find better value opportunities.AI Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for L'Air Liquide.

Approach 2: L'Air Liquide Price vs Earnings

For profitable companies like L'Air Liquide, the Price-to-Earnings (PE) ratio is a widely used valuation method because it directly relates how much investors are willing to pay for each euro of earnings. This metric not only reflects the company’s past and present performance, but also incorporates expectations for future growth and risk. In general, a higher PE ratio can be warranted if a business is expected to grow faster or is considered lower risk compared to peers.

Story Continues

L'Air Liquide is currently trading at a PE ratio of 28.3x. This is noticeably above the Chemicals industry average of 21.7x and also higher than the average PE of its closest peers at 24.3x. On the surface, this could suggest the market is pricing in above-average growth or viewing the business as particularly resilient.

To give a more complete picture, Simply Wall St also calculates a "Fair Ratio" for the company, which in this case is 24.9x. The Fair Ratio takes into account unique characteristics like L'Air Liquide's profit margins, earnings growth outlook, industry positioning and market cap, rather than relying solely on simple peer or sector comparisons. This makes it a more nuanced benchmark for what investors might reasonably pay for the stock today.

Comparing the Fair Ratio of 24.9x to the current PE of 28.3x, L'Air Liquide’s shares appear moderately overvalued based on earnings, as the market price is a little ahead of where fundamentals suggest they should be.

Result: OVERVALUEDENXTPA:AI PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1406 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your L'Air Liquide Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your story about a company, weaving together your view of its business, forecasts for its future revenue, earnings and margins, and the price you think is fair for its shares. Rather than relying only on static numbers, a Narrative connects L'Air Liquide’s real-world trajectory to a financial forecast. This helps you map out why the stock should be worth a certain amount and how that could change as new information emerges.

This dynamic approach is easy and accessible, available to everyone through Simply Wall St's Community page, trusted by millions of investors worldwide. Narratives let you compare your fair value with the current price, so you can decide whether to buy, hold, or sell, armed with both the numbers and your reasoning. Best of all, each Narrative stays up to date. If there is fresh news or earnings, your scenario updates alongside it.

For example, some L'Air Liquide investors believe major investments in electronics and hydrogen could drive the fair value as high as €216, while others, concerned about margin risks and competitive threats, see the fair value closer to €154.

Do you think there's more to the story for L'Air Liquide? Head over to our Community to see what others are saying!ENXTPA:AI Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include AI.PA.

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