CECO Environmental (CECO) has drawn fresh attention after recent trading left the stock down about 14% over the past month and roughly 16% over the past 3 months, despite solid full year revenue growth.
Recent trading tells a split story for CECO Environmental. The share price is up 12.6% year to date with a 1-year total shareholder return of 40.6%. However, momentum has cooled in recent weeks as short term share price returns have turned negative, even after a 4.1% gain in the latest session to US$67.31.
Scan beyond CECO Environmental and line up other industrial solution providers that recently pulled back after strong runs using the curated 32 high quality undervalued stocks as a starting universe.
CECO Environmental has already delivered solid gains to long-term holders, while the recent pullback raises a sharper question. Is the significant move now behind the stock, or does current pricing still suggest further potential upside?
Most Popular Narrative: 40% Undervalued
Against the last close at $67.31, the most followed narrative for CECO Environmental points to a fair value of about $111.86, using an 8.8% discount rate that heavily leans on backlog, orders, and the Thermon deal to frame the long term outlook.
The Thermon acquisition, which nearly doubles adjusted EBITDA and lifts higher margin short cycle and recurring revenue to roughly 40% of the mix, together with a targeted $40 million in cost synergies, is set up to support higher consolidated EBITDA margins and earnings over time.
See why 11 investors see CECO Environmental as 40% undervalued.
Result: Fair Value of $111.86 (UNDERVALUED)
Still, the bullish read on CECO Environmental hinges on big assumptions around Thermon integration and debt, as well as the timely delivery of large power and gas projects.
Find out about the key risks to this CECO Environmental narrative.
Next Steps
Mixed sentiment around CECO Environmental is clear, so move quickly. Review the underlying data and pressure test the bullish and cautious arguments yourself with the 2 key rewards and 1 important warning sign.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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