What happened
Prior to this week, March hadn't been very kind to Chart Industries (GTLS -0.37%), a leading manufacturer of equipment used in energy and industrial gas applications. Shares of Chart had fallen 23% from the start of the month through last week. This week, however, investors turned bullish on the stock after learning that the company's acquisition of Howden had been completed -- an acquisition that is expected to bolster the company's financials significantly in 2023.
As of the end of Thursday's trading session, shares of Chart have climbed 12.6% since the close of trading last Friday, according to data from S&P Global Market Intelligence.
So what
Last Friday, Chart announced that it had completed the acquisition of Howden in a $4.4 billion cash transaction. As a result of picking up the manufacturer of industrial equipment, Chart has increased its exposure to foreign markets, and it now has a geographic footprint that reaches 35 countries.
For investors, though, the material benefit of the acquisition to Chart's finances is what's most encouraging. Prior to the acquisition, Chart had forecast 2023 revenue and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $2.1 billion to $2.2 billion and $440 million to $480 million, respectively. With the Howden acquisition under its belt, however, Chart now projects revenue of $3.65 billion to $3.8 billion and adjusted EBITDA of $770 million to $810 million. But it's not only the income statement that's expected to benefit. Whereas chart originally forecast 2023 free cash flow of $250 million to $300 million, it now expects to generate free cash flow of $300 million to $350 million.
Now what
For investors who are gassed up about Chart's recent acquisition, the stock's recent rise shouldn't preclude them from considering a position. Currently, shares are trading at a discount, valued at 15.3 times forward earnings as opposed to their five-year average forward earnings multiple of 26.1.
