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Here's Why it is Worth Buying Chart Industries Stock Now

Zacks Equity Research

Investors seeking exposure in the industrial machinery space can choose from stocks that currently sport a Zacks Rank #1 (Strong Buy) or #2 (Buy). Of the many investment options, we believe that Chart Industries, Inc. GTLS will be a smart choice. This Georgia-based company’s stock currently carries a Zacks Rank #2.

We believe that the strengthening housing market, infrastructural development, lower taxes (due to 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 for investors.

Share Price Performance, Impressive Earnings Outlook: Market sentiments seem to be working in favor of Chart Industries over time. In the past three months, its share price has improved 42.3% compared with the industry’s growth of 9.4% and the Zacks Industrial Products sector’s rally of 9.3%.


In the fourth quarter of 2018, the company delivered impressive results, with earnings beating estimates by 12.96%. On a year-over-year basis, the bottom line increased 27.1% on the back of solid revenue growth.

For 2019, the company anticipates gaining from strengthening orders and backlog. It anticipates adjusted earnings per share of $2.50-$2.85, above previously mentioned $2.40-$2.75.

We believe that impressive results and solid outlook created positive sentiments for Chart Industries. In the past 30 days, earnings estimates for the company have been revised upward. Currently, the Zacks Consensus Estimate for earnings is pegged at $2.75 for 2019 and $3.89 for 2020, reflecting growth of 0.4% and 2.1% from the respective tallies 30 days ago.

Chart Industries, Inc. Price and Consensus

 

Chart Industries, Inc. Price and Consensus | Chart Industries, Inc. Quote

Revenue Growth: In the fourth quarter of 2018, Chart Industries’ revenues surpassed estimates by 1.33% and increased 7.7% year over year. This improvement was driven by healthy growth in Energy & Chemicals, Distribution & Storage West, and Distribution & Storage East segments. Orders in the quarter expanded 3.6% year over year.

For 2019, the company anticipates sales of $1.26-$1.31 billion, higher than previously mentioned $1.24-$1.30 billion. The new projection reflects year-over-year growth of 17-22%. Organic sales are projected to improve 7-9%, higher than 6-7% stated earlier.

The Zacks Consensus Estimate for revenues is pegged at $1.33 billion for 2019 and $1.51 billion for 2020. Estimates reflect year-over-year growth of 14.3% for 2019 and 13.8% for 2020.

Inorganic Moves: Over time, Chart Industries fortified its product portfolio and leveraged business opportunities through the addition of assets and disposition of non-core assets.

Notably, the company completed the divestment of its oxygen-related products business (known as CAIRE Medical) for $133.5 million in the fourth quarter of 2018. Also, Chart Industries completed the acquisition of VRV S.r.l. and its subsidiaries in the reported quarter. This buyout is predicted to boost its sales by $120 million, generate cost synergies and prove accretive to earnings in the first year of the acquisition.

Investments: Chart Industries uses part of its capital for the development of its business, and adding properties and plants to the asset base. In 2018, the company’s capital expenditure was $36 million. It now anticipates capital expenditure of $35-$40 million, a revision from previously mentioned $30-$40 million.

Other Key Picks

Some other top-ranked stocks in the industry are Atlas Copco AB ATLKY, The Middleby Corporation MIDD and Tennant Company TNC. All these stocks carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for 2019 have improved for Atlas, Middleby and Tennant. Further, earnings surprise in the last reported quarter was a positive 42.42% for Atlas, 9.82% for Middleby and 14.89% for Tennant.

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