GTLS - Chart Industries: Expect Earnings To Skyrocket
2024-01-28 05:45:15 ET
Summary
- Chart Industries' earnings per share is expected to more than double, potentially leading to a significant increase in stock value.
- The company's acquisition of Howden has expanded opportunities and diversified its business, reducing reliance on natural gas projects.
- Chart's strategy of specialized factories and a one-stop-shop sales approach gives it a competitive advantage and potential for continued growth.
- The debt issue is almost resolved. That alone could lead to a stock price revaluation.
- The business has long lead times and has plenty of opportunities available for the next three years despite headlines that imply otherwise.
Chart Industries ( GTLS ) management promised big things from the Howden acquisition, along with a promise to deleverage "fast". All of us saw the EBITDA guidance ever since the acquisition. That has not changed. The big surprise was guidance for the current year of earnings per share of $14 (roughly) which is more than double the earnings of last year. This is a stock that usually sells for 20 times expected earnings (at least). Should the company return to that minimum valuation (because it grows so fast) there could be a lot of upside potential to this stock in the coming fiscal year.
Message Reinforcement
Management recently reiterated a return to what is normal for the company:
Chart Industries: Expect Earnings To Skyrocket
Mid-teens organic revenue growth through 2026
Reported gross profit margin of mid-30%'s in 2026
Double-digit adjusted diluted EPS growth CAGR of mid-40%'s
95-100% Free Cash Flow Conversion
Source: Chart Industries Future Goal Reiteration (Chart Industries Press Release January 26, 2024)