This will be at least the fourth time I have written about Chart Industries (GTLS – Snapshot Report) as Bear of the Day. I’m not picking on the company. It has just been such a perfect example of declining EPS estimates (the reason for becoming a Zacks #5 Rank again) and a corresponding stock price decline.
When I last wrote about GTLS in February, shares were trading above $30 and saw another round of downward estimate revisions. Here’s what I said then…
This is not a story about an Energy sector company that was the victim of last year’s plunge in oil prices.
Rather, this $950 million (now $650 million market cap) global engineering company that specializes in equipment primarily used in processing and storage applications for liquefied natural gas and in the purification and storage of industrial gases for medical fields saw its profit decline begin over 15 months ago.
I first chose Chart Industries for a Bear of the Day article in November of 2013 after the company’s 3rd-quarter earnings report included a miss and guide lower, leaving investors and the stock completely out of fuel as shares dropped over 27% in the next three weeks from all-time highs near $130.
And I revisited the company as a Zacks #5 Rank Strong Sell in March of 2014 when the stock was still above $80. Here’s the chart for Chart that tells the story of steadily declining earnings estimates since 4Q13, which in turn explain why the stock fell over 75%…
(chart updated as of October 5, 2015)
The gas processing and storage technologies required for LNG and medical markets may be in the hands of Chart Industries. And the turn-around in the business outlook could come any day. But until the earnings estimates start heading in the other direction, it’s best to chart a different course.
The Zacks Rank kept you out of this stock for nearly 2 years. Let it be your guide to when it’s safe again.
Kevin Cook is a Senior Stock Strategist for Zacks where he runs the Follow The Money (FTM) portfolio.