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Ceco Environmental Corp. (CECO)
:CECO
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Ceco Environmental
(NASDAQ:CECO)
61Neutral
Positive Factors
Backlog Growth
The company's backlog grew to $540.9M at the end of 4Q24 compared to $437.5M at the end of 3Q24.
Order Activity
Strong order activity in Q4 has continued, which suggests positive trends for CECO despite a previous shortfall.
Negative Factors
Revenue Execution
The stock recently saw a pullback driven by lower-than-guided revenue execution for 2024.
Ceco Environmental (CECO) vs. S&P 500 (SPY)
Market Cap
$802.67M
Dividend YieldN/A
Average Volume (3M)253.87K
Price to Earnings (P/E)65.6
Beta (1Y)1.11
Revenue Growth2.40%
EPS Growth-0.38%
CountryUS
Employees1,200
SectorIndustrials
Sector Strength69
IndustryIndustrial Goods
Share Statistics
EPS (TTM)0.35
Shares Outstanding34,989,986
10 Day Avg. Volume250,451
30 Day Avg. Volume253,870
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.44
Price to Cash Flow (P/CF)109.80
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$34.75Price Target Upside51.48% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering6
Ceco Environmental Business Overview & Revenue Model
Company DescriptionCECO Environmental Corp. engages in the provision of engineering technology and solutions. It offers services in the field of environment, energy, fluid handling, and filtration. The firm operates through the following segments: Energy Solutions, Industrial Solutions, Fluid Handling Solutions, and Corporate and Other. The Energy Solutions segment improves air quality and solves fluid handling needs with market engineered, and customized solutions for the power generation, oil and gas, and petrochemical industries. The Industrial Solutions segment serves the industrial pollution control market. The Fluid Handling Solutions segment provides pump and filtration solutions that maintain safe and clean operations in some of the most harsh and toxic environments. The company was founded by Phillip DeZwirek in 1966 and is headquartered in Dallas, TX.
How the Company Makes MoneyCECO Environmental makes money through the sale of its diverse range of products and services designed to improve air quality and manage industrial emissions. The company's revenue streams primarily include the sale of air pollution control systems, such as scrubbers and baghouses, as well as fluid handling equipment like pumps and valves. CECO also generates income from providing engineering services, installation, and maintenance of their systems. Significant factors contributing to its earnings include regulatory requirements for emissions reduction across various industries and its ability to deliver customized solutions that meet specific industrial needs. Partnerships with industrial clients and government agencies further bolster its revenue generation capabilities.
Ceco Environmental Financial Statement Overview
Summary
Ceco Environmental shows solid revenue growth and improving operational efficiency, with stable gross margins but modest net profit margins. The balance sheet is strong, with decreasing debt levels, but equity returns are limited. Cash flow from operations has improved, though free cash flow variability remains a concern.Income Statement
Ceco Environmental has demonstrated solid revenue growth, with a significant increase from $316 million in 2020 to $558 million in 2024. Gross profit margins have remained relatively stable, hovering around 35%, indicating efficient management of production costs. However, net profit margins are modest, averaging around 2.3% over the last five years, reflecting challenges in translating revenue growth into substantial net income. EBIT and EBITDA margins have shown improvement, indicating better operational efficiency despite the competitive industry dynamics.75
Positive
Balance Sheet
The balance sheet reflects a stable financial structure with a debt-to-equity ratio decreasing from 0.39 in 2019 to 0.10 in 2024, suggesting prudent debt management. However, the equity ratio has marginally declined to 32.6%, indicating a moderate reliance on liabilities. ROE has remained modest, averaging around 5.2% over the years, suggesting limited capacity to generate substantial returns on equity.70
Positive
Cash Flow
Operating cash flow has shown improvement, growing from $4.4 million in 2020 to $24.8 million in 2024, indicating better cash generation from core operations. However, free cash flow has shown fluctuations, partly due to varying capital expenditures and financing activities. The ratio of operating cash flow to net income signifies strong cash conversion, but the free cash flow to net income ratio suggests potential volatility in cash reserves.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 557.93M | 544.85M | 422.63M | 324.14M | 316.01M | Gross Profit |
| 196.15M | 171.02M | 128.22M | 100.92M | 105.13M | EBIT |
| 35.40M | 34.57M | 34.89M | 9.86M | 21.44M | EBITDA |
| 45.23M | 47.45M | 38.33M | 21.89M | 30.52M | Net Income Common Stockholders |
| 12.96M | 12.91M | 17.42M | 1.98M | 8.21M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 37.83M | 54.78M | 45.52M | 29.90M | 35.99M | Total Assets |
| 759.70M | 600.29M | 504.72M | 416.20M | 419.31M | Total Debt |
| 23.58M | 155.48M | 119.66M | 72.54M | 81.93M | Net Debt |
| -14.25M | 100.70M | 74.14M | 42.64M | 45.93M | Total Liabilities |
| 507.81M | 362.80M | 286.57M | 210.24M | 215.70M | Stockholders Equity |
| 247.69M | 232.64M | 213.22M | 204.55M | 202.66M |
| Cash Flow | Free Cash Flow | |||
| 7.46M | 36.26M | 26.27M | 10.68M | 476.00K | Operating Cash Flow |
| 24.83M | 44.65M | 29.65M | 13.30M | 4.42M | Investing Cash Flow |
| -105.31M | -56.49M | -48.26M | -2.08M | -9.23M | Financing Cash Flow |
| 65.91M | 21.14M | 38.18M | -15.56M | 3.72M |
Ceco Environmental Technical Analysis
Negative
22.94
Price Trends
27.59
Negative
28.11
Negative
27.66
Negative
Market Momentum
-1.09
Negative
36.36
Neutral
22.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CECO, the sentiment is Negative. The current price of 22.94 is below the 20-day moving average (MA) of 24.28, below the 50-day MA of 27.59, and below the 200-day MA of 27.66, indicating a bearish trend. The MACD of -1.09 indicates Negative momentum. The RSI at 36.36 is Neutral, neither overbought nor oversold. The STOCH value of 22.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CECO.
Ceco Environmental Risk Analysis
Ceco Environmental disclosed 41 risk factors in its most recent earnings report. Ceco Environmental reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ceco Environmental Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $73.31B | 36.05 | 25.14% | 0.91% | 2.75% | 54.39% | |
74 Outperform | $30.05B | 35.09 | 8.55% | 1.15% | 16.23% | 34.42% | |
71 Outperform | $7.86B | 31.33 | 16.05% | 0.79% | 11.02% | 11.33% | |
65 Neutral | $146.95B | 38.80 | 7.57% | 0.53% | -13.50% | -17.25% | |
62 Neutral | $8.16B | 12.81 | 0.47% | 3.07% | 3.83% | -16.36% | |
61 Neutral | $802.67M | 65.63 | 5.39% | ― | 2.40% | -0.38% |
* Industrials Sector Average
Performance Comparison
CECO
Ceco Environmental
23.35
1.35
6.14%
DHR
Danaher
204.96
-49.29
-19.39%
ECL
Ecolab
255.18
32.18
14.43%
TTEK
Tetra Tech
28.69
-7.73
-21.22%
WCN
Waste Connections
183.17
14.49
8.59%
XYL
Xylem
123.63
-2.97
-2.35%
Ceco Environmental Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: 1.28% | Next Earnings Date: May 13, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong order and backlog performance, significant growth in adjusted EBITDA, and successful acquisitions contributing to a positive 2025 outlook. However, revenue growth was below expectations due to project delays, and there are concerns regarding free cash flow and potential tariff impacts. Despite these challenges, the overall sentiment remains cautiously optimistic.Highlights
Record-Breaking Orders and Backlog
Fourth quarter orders reached $219 million, a 71% increase year-over-year, with a record backlog of $541 million, up 46% from the previous year. The full-year orders of $667 million were up mid-teens year-over-year.
Adjusted EBITDA Growth and Margin Expansion
Adjusted EBITDA for 2024 was $62.8 million, a 9% increase from the prior year, with margins expanding by approximately 70 basis points.
Strong Performance in Power Generation and Energy Markets
The power generation market is expected to enter a multi-year capital investment super cycle, contributing significantly to CECO's backlog with two large projects totaling around $100 million.
Successful Acquisitions
The acquisitions of Verantis and Profire Energy are expected to be integrated well, contributing to the robust growth forecasted for 2025.
Lowlights
Revenue Growth Lagging Expectations
Full-year revenue growth was only 2% year-over-year, affected by customer-driven project delays that persisted throughout much of 2024.
Free Cash Flow Challenges
Free cash flow was negatively impacted by working capital timing, with a significant number of collections delayed to early 2025.
Potential Tariff and Economic Uncertainty
Concerns were raised about potential impacts from tariffs and other legislative items, which could create market uncertainty.
Company Guidance
During the CECO Environmental Fourth Quarter 2024 Earnings Call, Todd Gleason, the CEO, provided detailed guidance for 2025, emphasizing strong financial metrics and growth expectations. The company concluded 2024 with full-year revenue of $558 million, a year-over-year growth of 2%, and adjusted EBITDA of $62.8 million, marking a 9% increase from the previous year. CECO achieved record-breaking quarterly orders of $219 million, reflecting over a 70% growth, and full-year orders of $667 million, up by mid-teens percentage year-over-year. The company ended the year with a robust backlog of $541 million, a 46% increase from the previous year. Looking forward to 2025, CECO anticipates revenue between $700 million and $750 million, representing a 30% growth rate, with adjusted EBITDA projected between $90 million and $100 million, a 50% increase. The guidance also highlighted a positive book-to-bill ratio, expected margin improvements, and a free cash flow range of 60% to 75% of adjusted EBITDA. The company remains optimistic about continued order momentum and market opportunities across various sectors, including power generation and industrial air and water treatment solutions.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.