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Why Shares of Chart Industries Climbed 13% in April

By Scott Levine - May 9, 2021 at 2:44PM

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April showers couldn't dampen shareholders' spirits after the company reported strong first quarter earnings.

What happened

Falling more than 9% through the first three weeks of April, shares of Chart Industries (GTLS -1.67%) weren't giving investors much to celebrate -- especially since the S&P 500 had risen more than 4% over the same period.

The company reported first quarter 2021 earnings on April 22 though, and things quickly took a turn for the better. Between the unexpectedly good earnings report and management's upwardly revised 2021 forecast -- in addition to a show of optimism from Wall Street -- shares of Chart Industries rebounded from their earlier performance and ended the month strong, resulting in a rise of 13% last month, according to data provided by S&P Global Market Intelligence.

A businessman creates a digital financial chart.

Image source: Getty Images.

So what

Although Chart fell short of analysts' expectations on the top line, the company reported adjusted EPS of $0.80, considerably surpassing the $0.69 adjusted EPS that analysts were looking for the company to report. Dig below the headline figures, however, and it becomes clear why investors were so happy with the company's first quarter of the new year. Chart reported that it received a company record $417 million in orders during the first quarter. This, in turn, contributed to the company reporting a record backlog of $934 million, representing a 29% year-over-year increase -- a promising sign that Chart's future appears bright.

Investors didn't have to only take the impressive backlog growth as an auspicious indication of the days to come though. Upwardly revising its earlier forecast of about $1.35 billion, management informed shareholders that it expected the company to generate 2021 revenue of approximately $1.39 billion. Management's improved outlook extended to the bottom line as well, raising its 2021 adjusted EPS forecast to about $3.90 from the original guidance of approximately $3.754. However, it wasn't only the income statement where management directed investors' attention; Chart expects to generate free cash flow of about $210 million in 2021. Should the company achieve its free cash flow guidance, it will represent a 56% increase over that which it reported in 2020.

A day after the company's earnings presentation, investors found more to cheer. Maintaining its overweight rating on the stock, Piper Sandler raised its price target to $185 from $175, according to Thefly.com. Based on the stock trading at about $147 on April 22, Piper Sandler's price target suggests about 26% of upside.

Now what

Turning in an impressive first quarter performance, Chart Industries understandably gave investors a lot to cheer last month. Take into account management's optimistic outlook on the rest of 2021, and it seems that investors may have more to celebrate in the months to come. For investors bullish on the growth of the hydrogen economy, Chart Industries certainly appears to be a stock to watch.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool recommends Chart Industries. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Chart Industries, Inc. Stock Quote
Chart Industries, Inc.
GTLS
$199.92 (-1.67%) $-3.39
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,229.41 (0.53%) $22.14

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