Fuel Tech, Inc. FTEK currently seems to be a smart choice for investors seeking exposure in the pollution control space. Solid fundamentals and positive revision in earnings estimates are reflective of healthy growth potential of the stock.
This Warrenville, IL-based company currently sports a Zacks Rank #1 (Strong Buy) and has a VGM Score of A. It belongs to the Zacks Pollution Control industry, currently placed in the top 4% (with Zacks Industry Rank #10) of more than 250 Zacks industries. Notably, the top 50% of the Zacks-ranked industries tend to outperform the bottom 50% by a factor of more than 2 to 1.
We believe that stringent government regulations, pollution-related risks and growing demand in emerging nations are aiding pollution control equipment and services.
Below we discussed why investing in Fuel Tech will be a smart choice.
Share Price Performance, Impressive Earnings Outlook: Market sentiments seem to be working in favor of Fuel Tech over time. In the past three months, the company’s share price has gained 84.1% compared with the industry’s growth of 13.3%.
It is worth mentioning here that the company’s shares have surged 85% since the release of fourth-quarter 2018 results on Mar 14, 2019. The quarter’s earnings of 4 cents per share surpassed the Zacks Consensus Estimate.
For 2019, Fuel Tech anticipates gaining from solid offerings, improved infrastructure globally, technological expertise, healthy balance sheet and discontinuation of weak China operations.
In the past 30 days, earnings estimates for 2019 and 2020 have been revised upward, reflecting positive sentiments about the company’s growth prospects. Currently, the Zacks Consensus Estimate for earnings is pegged at 5 cents for 2019 and 7 cents for 2020, reflecting growth of 400% and 16.7% from the respective 30-day-ago tallies.
Segmental Strength: Fuel Tech operates through two business segments — Air Pollution Control and FUEL CHEM. The company anticipates that its ability to adapt to changing fuel sources from fossil to natural gas will prove advantageous for the Air Pollution Control segment in the quarters ahead. Business opportunities for this segment are strong in the United States, India, Europe, Southeast Asia, Mexico and South Africa.
Revenue contributions from the FUEL CHEM segment are anticipated to be consistent in the near term. The company offers solutions and has growth opportunities in the United States and Europe.
Technological Advancements & Geographical Presence: Fuel Tech’s technological expertise enabled it to offer products that provide clean efficient energy. It has as many as 128 patents worldwide and also has 68 patents pending.
In addition, Fuel Tech’s global footprint is an added advantage. The company has more than 1,200 installations in four continents. Notably, it derived nearly 77.6% of revenues from operations in the United States and the rest from foreign operations in 2018.
Balance Sheet: Fuel Tech has a solid balance sheet, with no long-term debt, and $18.1 million in cash and cash equivalents at the end of the fourth quarter of 2018. No debt balance, resulting in nil financial obligations, raises the company’s investment appeal compared with its peers.
Other Key Picks
Some other top-ranked stocks in the Zacks Industrial Products sector are DXP Enterprises, Inc. DXPE, Sun Hydraulics Corporation SNHY and Roper Technologies, Inc. ROP. All these stocks currently sport a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 60 days, earnings estimates for all these three stocks have improved for the current year. Further, average earnings surprise for the last four quarters was a positive 46.55% for DXP Enterprises, 2.27% for Sun Hydraulics and 4.96% for Roper.
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