GTLS Is Producing Cash, What Is Holding You Back?
Here is why we think Chart Industries (GTLS) is worth a look
- Cash Yield: Not many stocks offer free cash flow yield of 5.3%, but GTLS does
- Fundamentals: 3-Year average revenue growth of 45.2% and operating margin of 13.4% show good fundamentals
- Valuation: While tad expensive at PE of 32.6, the combo of cash yield, growth, and margin could still get noticed
- Compared to S&P, while you get higher valuation, you further get higher revenue growth, but lower margins
Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, Chart Industries provides engineered equipment and cryogenic solutions for energy and industrial gas industries, specializing in storage, distribution, vaporization, and service across multiple product segments.
| GTLS | S&P Median | |
|---|---|---|
| Sector | Industrials | – |
| Industry | Industrial Machinery & Supplies & Components | – |
| Free Cash Flow Yield | 5.3% | 3.9% |
| Revenue Growth LTM | 8.9% | 5.0% |
| Revenue Growth 3YAVG | 45.2% | 5.8% |
| Operating Margin LTM | 16.2% | 18.8% |
| Operating Margin 3YAVG | 13.4% | 17.7% |
| PE Ratio | 32.6 | 23.5 |
But do these numbers tell the full story? Read Buy or Sell GTLS Stock to see if Chart Industries still has an edge that holds up under the hood.
That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure
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The Point? The Market Can Notice, And Reward
Here are some stocks that showed strong cash flow yield in mid 2024, and saw strong returns in the subsequent 12 months
- FFIV gained 70% in a year after showing a 6.9% free cash flow yield
- CSCO had 6.6% yield, and returned 50% in the next 12 months
- PM rose over 85% percent as the market noticed its 5.7% free cash flow yield and good underlying revenue growth
But Consider The Risk
GTLS isn’t immune to big drops either. It fell nearly 90% in the Global Financial Crisis, around 78% during the Covid pandemic, and over 57% in the recent inflation shock. Even the 2018 correction hit it for about 45%. Good fundamentals can only do so much when the market turns sour. Losses of this size show the risk that’s still there, even with solid setups.
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read GTLS Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.