Hammond Energy Options (TSX:HPS.A) is ripping larger in early Friday buying and selling. Its inventory soared as a lot as 33% to $190 per share this morning.
Respectable outcomes however nothing thrilling
The transformer and energy options firm introduced good third quarter outcomes. Gross sales elevated 13.7% to $218 million. Adjusted earnings earlier than curiosity, tax, depreciation, and amortization (EBITDA) hit $30 million for a 13% EBITDA margin. It noticed some margin compression from unabsorbed construction-related overhead bills. Adjusted web earnings per share of $1.56 have been up 7% 12 months over 12 months.
An enormous backlog transfer propels Hammond Energy larger
Whereas these outcomes are okay, it was the 27.7% enhance in backlog that basically propelled the inventory. Administration has famous for a number of quarters that knowledge centre citation exercise was sturdy. It lastly noticed an acceleration in knowledge centres orders on the finish of the quarter. These have been substantial orders that made up 53% of the third quarter backlog.
The corporate has been constructing out extra manufacturing capability in Mexico this 12 months. This capability is ready to come back on-line by the top of the 12 months. The timing couldn’t be higher. As a result of nature of a few of these knowledge centre tasks, Hammond will be capable of exceed its authentic anticipated manufacturing capability to $1.2 billion of gross sales (up from $1 billion beforehand).
The Silly takeaway
Hammond Energy delivered a good quarter of fiscal outcomes. Nevertheless, the massive mover was rising demand for specialised knowledge centre transformer merchandise. Buying and selling with a price-to-earnings ratio of 27, the market clearly has large future expectations for this gritty, blue-chip energy options firm.
