Chart Industries, Inc. GTLS, on Mar 11, 2020, announced that its board has approved a share repurchase program authorizing it to buy back up to $75 million of its shares over the next year. Yesterday, the company’s share price decreased 20.5%, closing the trading session at $25.24 per share.
Under this program, the company is likely to make share repurchases through several means that include open market transactions, privately negotiated transactions and block purchases. The timing and amount of share repurchases will depend on certain factors such as share price and market conditions. Notably, the company will carry out the repurchase program per the Securities Exchange Act Rules.
Strong cash flows allow Chart Industries to effectively deploy capital for repurchasing shares, paying out dividend and making acquisitions. Notably, the company’s free cash flow recorded an increase of 17.1% to $97.7 million in 2019, on a year-over-year basis. In 2019, it repurchased shares worth $2 million. As a matter of fact, this share repurchase program is likely to instill confidence among investors.
Existing Business Scenario
Chart Industries is well placed to gain from growth in liquefied natural gas (LNG) activities and specialty markets. Also, the company’s globally diversified business is a boon. Notably, it operates in Europe, the Americas and Asia.
Also, the company has been investing in acquisitions over time. In 2019, Chart Industries used $603.9 million for acquisitions. In this regard, one of the significant buyouts of the company is that of the Industrial Air-X-Changers business of Harsco Corporation (HSC) in July 2019. The acquired assets are strengthening chart Industries’ businesses in the industrial energy and gas market.
However, rising costs of sales have been a major concern for the company. For instance, in 2019, its cost of sales rose 22%, on a year-over-year basis. In the same period, its selling, general and administrative expenses jumped 18.7%, year over year. Rising costs and operating expenses, if unchecked, might be detrimental to the company in the quarters ahead.
In the past three months, shares of the Zacks Rank #3 (Hold) company have decreased 58.1%, compared with the industry’s decline of 33.1%.
Stocks to Consider
Some better-ranked stocks from the Zacks Industrial Products sector are Graco Inc. GGG, Dover Corporation DOV and Regal Beloit Corporation RBC. While Graco sports a Zacks Rank #1 (Strong Buy), Dover and Regal Beloit carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Graco delivered positive earnings surprise of 0.40%, on average, in the trailing four quarters.
Dover delivered positive earnings surprise of 5.36%, on average, in the trailing four quarters.
Regal Beloit’s earnings surprise in the last reported quarter was 0.81%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Regal Beloit Corporation (RBC) : Free Stock Analysis Report
Graco Inc. (GGG) : Free Stock Analysis Report
Dover Corporation (DOV) : Free Stock Analysis Report
Chart Industries, Inc. (GTLS) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research