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Why DMC Global Stock Soared 40% in April

By Beth McKenna – May 6, 2019 at 7:59PM

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Shares of the maker of explosive components have exploded 95% higher in 2019.

What happened

Shares of DMC Global (BOOM 0.27%) gained 39.6% in April, according to data from S&P Global Market Intelligence. The S&P 500,including dividends, returned 4.1% last month.

DMC makes explosive components for use in oil-field drilling and metal fabrication applications. 

Shares are up a booming 95.2% in 2019 through Monday, May 6, versus the S&P 500's 17.7% return over this period. 

A explosion of blue, yellow, and green colors on a black background.

Image source: Getty Images.

So what

The main catalyst for DMC Global stock's big pop last month came on April 3, when the company announced that it expected to report first-quarter 2019 revenue of approximately $100 million, up considerably from its initial forecast of $82 million to $85 million. It attributed the better-than-expected results primary to "strong sequential growth at DynaEnergetics," its oilfield products business. Sales for NobelClad, its composite metals business, also exceeded its initial forecast.

Shares surged 16% on that day and continued to move upward throughout the month. On April 25, DMC reported its official first-quarter results, with revenue jumping 49% year over year to $100.1 million and adjusted earnings per share (EPS) coming in at $1.02, easily beating the $0.74 Wall Street consensus estimate.

Additionally, DMC Global stock got a 6.2% boost following news out mid-month that it was replacing Belmond, which was acquired by luxury group LVMH Moet Hennessy Louis Vuitton, in the S&P SmallCap 600 index effective prior to the market open on April 18. Stocks being added to an index often rise upon the news in anticipation of increased demand for shares by index funds.

BOOM Chart

Data by YCharts.

DMC Global stock's robust April performance is a continuation of the momentum shares have enjoyed in 2019, thanks largely to improving energy markets this year.

BOOM Chart

Data by YCharts.

Now what

DMC Global stock could continue to move higher if energy markets continue to strengthen. For full-year 2019, Wall Street is expecting the company's adjusted EPS to increase nearly 78% year over year.

Beth McKenna has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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