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Summary

  • The stock is fairly valued on 2015 earnings.
  • The company has solid financial efficiency ratios.
  • The stock is near oversold territory.

Chart Industries, Inc. (NASDAQ:GTLS) is an independent global manufacturer of engineered equipment used in the production, storage and end-use of hydrocarbon and industrial gases. The company operates in three segments: energy and chemicals, distribution and storage, and biomedical. On February 25, 2014, the company reported fourth quarter earnings of $0.82 per share, which missed the consensus analysts' estimates by $0.01. In the past year the company's stock price is up 1.82% while the S&P 500 (NYSEARCA:SPY) has gained 19.3% in the same time frame. I've already purchased a batch of the stock long ago for my growth portfolio and am down 29.93% on the batch. With all this in mind, I'd like to take a moment to evaluate the stock on a fundamental, financial and technical basis to see if right now is a good time to purchase more of the stock for my portfolio.

Fundamentals

The company currently trades at a trailing 12-month P/E ratio of 31.27, which is expensively priced, but I mainly like to purchase a stock based on where the company is going in the future as opposed to what it has done in the past. On that note, the 1-year forward-looking P/E ratio of 19.15 is currently fairly priced for the future in terms of the right here, right now. The 1-year PEG ratio (1.05), which measures the ratio of the price you're currently paying for the trailing 12-month earnings on the stock while dividing it by the earnings growth of the company for a specified amount of time (I like looking at a 1-year horizon), tells me that the company is fairly priced based on a 1-year EPS growth rate of 29.75%. The company has great near-term future earnings growth potential with a projected EPS growth rate of 29.75%. In addition, the company has great long-term future earnings growth potential with a projected EPS growth rate of 21.55%.

Financials

On a financial basis, the things I look for are the dividend payouts, return on assets, equity and investment. The company does not sport a dividend to speak of but is sporting return on assets, equity and investment values of 5.9%, 11.5% and 11.9%, respectively, which are all respectable values. In this particular instance, I will forego the dividend aspect of the financials because the stock is in my growth portfolio, and in the growth portfolio a stock does not have to have a dividend.

Technicals

(click to enlarge)

Looking first at the relative strength index chart [RSI] at the top, I see the stock hovering around oversold territory with a current value of 35.93 but with downward trajectory. I will look at the moving average convergence-divergence [MACD] chart next. I see that the black line is below the red line with the divergence bars increasing in height, indicating bearish momentum. As for the stock price itself ($81.29), I'm looking at the 50-day simple moving average (currently $86.06) to act as resistance and $79.34 to act as support for a risk/reward ratio which plays out to be -2.4% to 5.87%.

Recent News

  1. On Feb. 25 the company reported fourth quarter earnings which missed on the top and bottom lines. The company reported $0.82 per share which missed estimates by a penny on revenue of $303.8 million which missed expectations of $19.46 million.

Conclusion

Gas to liquids is what this company is all about but the company keeps reporting bad quarter after bad quarter. Fundamentally, the stock is fairly priced on next year's earnings and on earnings growth. Financially, I believe all the returns are safe and sound. Technically, it appears the stock is oversold. Due to the oversold technicals, high near-term earnings growth potential, and high long-term earnings growth potential I'm going to be nibbling some of the stock at this price.

Disclaimer: This article is meant to serve as a journal for myself as to the rationale of why I bought/sold this stock when I look back on it in the future. These are only my personal opinions and you should do your own homework. Only you are responsible for what you trade and happy investing.

Source: Chart Industries Has Great Near- And Long-Term Earnings Growth Potential