Increasingly, businesses worldwide are taking Environmental, Social, and Governance (ESG) factors into account in their operations. As a consequence, CECO Environmental (NASDAQ:CECO) which is one of the leading forces behind the transition toward environmentally focused solutions, saw its stock surging upwards.
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The stock has been up over 115% in the past year. It has a healthy pipeline and booking momentum, as well as potential growth opportunities stemming from mergers and acquisitions, suggesting there’s potential for further upside. ESG-conscious investors looking for a growth-oriented stock may find this of interest.
CECO’s Eco-services
CECO Environmental is an eco-focused player serving various markets, including industrial air, industrial water, and energy transition, through its principal business divisions: Engineered Systems and Industrial Process Solutions. CECO offers cutting-edge technology and application know-how, empowering businesses to expand while ensuring safety, cleanliness, and efficiency in safeguarding people, the environment, as well as industrial machinery.
The company’s operations span different regions worldwide, with contributions aimed at enhancing air quality, fine-tuning the energy value chain, and providing tailor-made solutions for various applications. These include power generation, petrochemical processing, and general industrial, among many others.
Forbes ranked CECO #20 in its “America’s Most Successful Small-Cap Companies” list for 2024, evidence of the company’s reputation and success.
CECO’s Q1 Financial Results & Outlook
The company recently reported its financial results for Q1. Revenue was $126.33 Million, an increase of 12.2% from last year, although it fell short of expectations by $9.49M. Non-GAAP net income increased by 11%, reaching $4.0 million, with a non-GAAP EPS of $0.11 in line with expectations.
The first quarter saw orders of $145.3 million and a backlog of $389.5 million, marking a 9% increase. Seventy percent of this is expected to convert to revenue in 2024. The company is maintaining its 2024 full-year revenue guidance of $590 to $610 million, an approximate 10% increase year over year at the midpoint and in line with consensus expectations for $601.14 million.
During the quarter, CECO bought back $3 million of its stock, having repurchased $15 million of stock since 2021. There is $10 million remaining on the buyback authorization announced in May 2022.
What Is the Price Target for CECO Stock?
Analysts following the company are constructive on the stock. Craig-Hallum analyst Aaron Spychalla recently raised the price target from $25 to $28, while maintaining a Buy rating on the shares, noting the company’s strategic growth.
Analysts rate CECO Environmental as a Strong Buy based on the recommendations and price targets assigned by six Wall Street analysts over the past three months. The average price target for CECO stock is $27.67, representing a 11.44% upside from current levels.
The stock has been trending upward, climbing over 20% in the past 90 days. It sits at the high end of its 52-week price target of $10-68-$25.82 and demonstrates ongoing positive price momentum, trading above the 20-day (23.81) and 50-day (23.01) moving averages.
Final Analysis on CECO
CECO Environmental is well-positioned to continue benefiting from the increasing demand for eco-conscious solutions across industries. The stock has shown positive price momentum, and the company’s recent growth and the projected upside from current levels suggest that CECO could continue to climb to higher levels, making it an attractive option for ESG-conscious investors.
