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CECO Environmental Upped to Strong Buy on Solid Prospects


Zacks Investment Research upgraded CECO Environmental Corporation CECE to a Zacks Rank #1 (Strong Buy) on Jan 10, 2017. Going by the Zacks model, companies sporting a Zacks Rank #1 have strong chances of outperforming the broader market.

Post the release of third-quarter 2016 results on Nov 8, CECO Environmental’s shares yielded return of 35%, outperforming the return of 12.6% recorded by the Zacks categorized Pollution Control Equipment & Services industry.

Why the Upgrade?

Market sentiments have been favoring CECO Environmental for quite some time now. In the first three quarters of 2016, the company reported better-than-expected results, with an earnings surprise of 20% in the last reported quarter. In the quarters ahead, the company plans to boost shareholders’ value through steady growth in market share and recurring revenues, lower leverage ratio, margin improvement and higher free cash flow generation.

Also, CECO Environmental believes in acquiring meaningful business for expanding in new and unexplored markets as well as improving its product offerings. At its third-quarter conference call, the company communicated that the acquired Peerless assets (acquired in Sep 2015) contributed nearly $13.1 million in operating income in the first nine months of 2016, while adding $20 million in operational efficiency. For 2017, the company anticipates to be track to deliver $20 million in earnings before interest, taxes, depreciation and amortization.

Investors seem to be optimistic about CECO Environmental’s future prospects, as evident from upward revisions in earnings estimates for the stock. Over the last 60 days, the Zacks Consensus Estimate for the company increased 6.3% to 84 cents per share for 2016 (results yet to be reported) and by 4.5% to 93 cents per share for 2017.

CECO Environmental Corp. Price and Consensus

CECO Environmental Corp. Price and Consensus | CECO Environmental Corp. Quote

Other Stocks to Consider

CECO Environmental Corporation has a market capitalization of $473 million. Other stocks worth considering in the pollution control industry include Heritage-Crystal Clean, Inc. HCCI, Donaldson Company, Inc. DCI and Vertex Energy, Inc. VTNR. While Heritage-Crystal Clean sports a Zacks Rank #1, both Donaldson Company and Vertex Energy, Inc. carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Heritage-Crystal Clean reported better-than-expected results in the last quarter, with a positive earnings surprise of 69.23%. Also, earnings estimates for 2017 improved over the past 60 days.

Donaldson Company, Inc.’s earnings estimates for fiscal 2017 and 2018 have been revised upward, over the last 60 days. Also, the company reported better-than-expected results in the last quarter, with a positive earnings surprise of 8.57%.

Vertex Energy, Inc. has witnessed positive revisions in bottom-line estimates for 2017, over the past 60 days. Also, the company has a positive average earnings surprise of 27.12% for the trailing four quarters.

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