Recent move in Chart Industries stock

Chart Industries (GTLS) drew attention after its latest trading session, with the stock closing at $207.53. Investors are weighing this price against the company’s recent returns and underlying financial profile.

Recent trading has been relatively quiet for the share price; however, the 1 year total shareholder return of 41.96% and 3 year total shareholder return of 57.23% suggest that longer term momentum has been stronger than the latest moves imply.

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With Chart Industries trading near its recent levels, a loss reported despite revenue of $4.1b and an indicated 14% intrinsic discount, the question is simple: is there real value here, or is the market already pricing in future growth?

Preferred price-to-sales multiple of 2.4x: Is it justified?

On a P/S basis, Chart Industries trades at 2.4x, which screens as better value than its closest peer group but richer than both its industry and an estimated fair ratio.

The P/S multiple compares the company’s market value with its annual revenue, so it is often used for businesses that are not yet consistently profitable, like Chart Industries, which recently reported revenue of $4.1b alongside a loss of $46.7m.

Compared with peers that average a P/S of 3.9x, the stock sits at a lower revenue multiple. This implies the market is not assigning the same revenue premium as it does to that group. However, against the broader US Machinery industry average of 2.1x, Chart Industries trades at a higher level. Versus an estimated fair P/S of 1.9x, the current 2.4x suggests investors are ascribing a richer valuation than that fair ratio indicates as a potential anchor level over time.

Result: Price-to-sales of 2.4x (OVERVALUED)

However, the recent loss of $46.7m and Chart Industries trading slightly above the analyst price target could challenge the idea that current pricing reflects clear value.

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Another View on Value: Cash Flows Tell a Different Story

While the P/S ratio of 2.4x makes Chart Industries look expensive against both its industry and an estimated fair ratio, our DCF model points the other way. With the stock at $207.53 versus a DCF value of $241.93, the shares screen as undervalued. Which signal you prioritize will depend on how you weigh revenue-based versus cash flow-based valuation metrics.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Chart Industries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 47 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

If the mix of risks and rewards around Chart Industries feels finely balanced, now is a good time to look through the data yourself and decide what stands out most for your portfolio. To help frame that view, take a closer look at 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.