Shares of industrial equipment supplier Chart Industries (GTLS 0.04%) rallied on Thursday, trading 11% higher as of 2 p.m. ET.
Chart reported first-quarter earnings Thursday morning that beat expectations on the bottom line, but other elements of the report were even more bullish and reassuring, including growth in new orders, management's reiteration of guidance, and the news that the company had only experienced a modest impact from tariffs.
Since the stock had sold off violently after President Donald Trump unveiled his global tariffs early in April, Chart rallied back hard on the news that the impacts of those import taxes on the company have not been as intense as investors feared.
NYSE: GTLS
Key Data Points
Business momentum remains intact despite tariffs
In the first quarter, Chart's sales rose 5.3% to $1.0 billion in sales, which slightly missed analysts' consensus expectations, while adjusted (non-GAAP) earnings per share rose by a strong 38.8% to $1.86, which was $0.03 ahead of expectations. Even though the revenue growth figure might not pop out to investors as terrific, Chart's equipment business can see a lot of revenue recognition move around from quarter to quarter. Its new orders number, which perhaps gives a better sense of the company's growth trajectory, was up by a much stronger 17.3%, and the company's backlog rose by 18.8%, topping $5 billion for the first time.
Chart also reiterated its EPS and free cash flow guidance for 2025, which is important as the company is still paying down the debt it took on when it acquired rival Howden in early 2023. That debt load is likely why Chart shares sold off by roughly 50% between late January and early April, purely on tariff and macro-related fears.
On that note, Chart's orders indicate it's not really seeing any demand destruction, and the company also anticipated just a $50 million cost impact from tariffs. Not only is that small, but Chart also said that $50 million was before any mitigation efforts, as well as an April price increase. So that impact could wind up close to nil.
Chart is a very cheap stock if it pays down debt
Management anticipates $12 to $13 in adjusted EPS in 2025, which means the stock is only trading around 12 times this year's forecast earnings, even after Thursday's rally. Keep in mind, Chart's stock is still about 32% below its late January levels.
As a U.S.-based equipment supplier that has a big LNG equipment business -- and with increasing domestic fossil fuel production a key focus of the current administration -- Chart could be a strong outperformer this year even after today's rally, assuming there's no recession.
