Chart Industries, Inc. (NASDAQ:GTLS) currently seems to be a smart choice for investors seeking exposure in the machinery space. Solid fundamentals and positive revision in earnings estimates are reflective of healthy growth potential of the stock.
This Ball Ground, GA-based company currently carries a Zacks Rank #2 (Buy). It belongs to the Zacks Manufacturing – General Industrial industry, which comes under the ambit of Zacks Industrial Products sector.
We believe that the strengthening housing market, infrastructural development, lower taxes with the implementation of the U.S. Tax Cuts and Jobs Act, solid manufacturing activities and other tailwinds will aid industrial machinery companies.
Below we discussed why investing in Chart Industries will be a smart choice.
Financial Performance & Earnings Estimates: The company delivered impressive results in the first quarter of 2019. Its adjusted earnings of 39 cents per share surged 116.7% from the year-ago figure of 18 cents. The results benefited from healthy growth in orders.
It is worth mentioning here that the company delivered a positive average earnings surprise of 16.56% in the last four quarters.
For 2019, Chart Industries anticipates gaining from healthy contribution from its LNG projects (revenues to be generated from Calcasieu and Golar Gimi projects are predicted to be $28-30 million) and acquisition of the Industrial Air-X-Changers business of Harsco Corporation (NYSE:HSC) . The company currently predicts earnings for the year to be $2.85-$3.20 per share, higher than the original guidance of $2.50-$2.85 and the previously mentioned $2.70-$3.05. Adjusted earnings in 2020 are predicted to be $5.05-$5.35 per share.
Further, earnings estimates for the company have been revised upward in the past 60 days. Currently, the Zacks Consensus Estimate for Chart Industries is pegged at $3.06 for 2019 and $4.90 for 2020, reflecting growth of 5.5% and 22.8% from the respective 60-day-ago figures.
Chart Industries, Inc. Price and Consensus
Chart Industries, Inc. price-consensus-chart | Chart Industries, Inc. Quote
In the past year, the company’s shares have gained 11.2% compared with the sector’s growth of 2.7%.
Buyout of Harsco’s Business Unit: Over time, Chart Industries fortified its product portfolio and leveraged business opportunities through the addition of assets. In May 2019, it announced that it will purchase Harsco’s Industrial Air-X-Changers business, which will help in strengthening its businesses in the industrial energy and gas markets.
As noted, the deal value was set at $592 million in cash. The buyout is anticipated to generate cost synergies of roughly $20 million in the initial year of the completion (anticipated on Jul 1, 2019). Also, the assets acquired will help in boosting Chart Industries’ margin profile.
Including the impacts of LNG projects and the above-mentioned buyout, the company increased its revenue projection to $1.41-$1.46 billion from the previously mentioned $1.29-$1.34 billion. Also, the new projection is above the original guidance of $1.26-1.31 billion.
For 2020, the company anticipates revenues of $1,730-$1,775 million.
Investments: Chart Industries uses part of its capital for the development of its business, and adding properties and plants to the asset base. The company’s capital expenditure was $36 million in 2018 and approximately $5.9 million in the first quarter of 2019.
It now anticipates capital expenditure of $35-$40 million for 2019.
Debt Profile: Chart Industries’ long-term debt totaled $318 million at the end of the first quarter of 2019. This balance reflects a decline of 40.4% from the previous quarter. The company’s debt profile is better than the industry. Its long-term debt/capital of 26.2% is lower than the industry’s 43.6%.
Other Key Picks
Two other top-ranked stocks in the industry are Roper Technologies, Inc. (NYSE:ROP) and DXP Enterprises, Inc. (NASDAQ:DXPE) . While Roper currently sports a Zacks Rank #1 (Strong Buy), DXP Enterprises carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 30 days, earnings estimates for these two stocks have improved for the current year. Further, average earnings surprise for the last four quarters was positive 8.43% for Roper and 48.47% for DXP Enterprises.
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Roper Technologies, Inc. (ROP): Free Stock Analysis Report
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