Emeco’s Share Price gets ‘Rising Star’ Label following Good News Week

Emeco Holdings Ltd [ASX:EHL] has been a rising star on the ASX recently, especially after releasing a predicted 40% year-on-year EBITDA growth for this year, improved margins and a 20% return on capital last week.

Following that news, their share price shot up by 14%. On Friday, they announced that existing holder, Paradice Investment Management Pty Ltd, had increased their position within the company by 9.047% — a purchase of over five million shares.

Granted, this news doesn’t directly relate to their share price, but the confidence of such a large fund manager is sure to rouse individual investors to do the same.

Today, Emeco has increased again by 7.8% — bringing their shares to $2.14 apiece.

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Why is Emeco attractive to investors?

Being one of the best performers on the ASX today, it’s definitely been drawing eyes.

Emeco Holdings is a leading provider in equipment leasing to earthmovers, and has a strong demand for its services.

As was revealed in their FY19 Guidance, Operating Update and Investor Presentation last Wednesday, they have a lot to celebrate — an Operating EBITDA ranging between $211 and $213 million for this year, strong market conditions (resulting in more demand for their hiring services), strong cash flow, and capital expenditure due to generate $25 million EBITDA next year, due to the recent purchase of high-utilisation assets.

This, along with the buy up from Paradice on Friday following a stabilisation of the share price, points towards very promising news for the miner.

Should you be investing in Emeco?

This news, paired with an attractive buy price, is a good sign for potential investors. However, whether they can continue to deliver such a growth rate is another issue altogether, and worth watching closely.

We recommend you do your own extensive research before placing your money in Emeco.


Ryan Clarkson-Ledward,
For Money Morning

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