WHITEFISH, MT / ACCESSWIRE / May 18, 2015 / Cemtrex Inc. (OTCQB: CTEI), a diversified provider of electronics manufacturing services and emissions monitoring solutions for industrial processes, recently announced second quarter revenue that increased 24% to $14,330,940 and net income that jumped 36% to $1,081,573, driven by strong operational improvements in spite of currency fluctuations and emerging market concerns.
"We have continued to experience robust top line growth across our business during this second quarter," said Cemtrex Inc. CEO Saagar Govil. "Despite currency fluctuations and market concerns about emerging economies, we see our core business segments continuing to thrive. With the recent quarter, we believe Cemtrex is on the right track for an uplist to Nasdaq in the near future."
Attractive Valuation
Cemtrex trades with a market capitalization of $25 million, according to YCharts, which could be significantly undervalued given its track record of growth relative to many other companies within its peer group. With an attractive 88% return on equity, 13% return on assets, and 12% operating earnings yield, the stock appears to be relatively attractive for fundamental investors.
The stock trades with a price-sales ratio of just 0.47x compared to CECO Environmental Inc.'s (NASDAQ: CECE) 1.04x and Fuel Tech Inc.'s (NASDAQ: FTEK) 0.81x price-sales ratios. On the bottom line, the company's enterprise value to EBIT ratio stands at 11.57x compared to a 25.84x ratio for CECO Environmental and an 87.5x (estimated) ratio for Advanced Emissions Inc. (OTC Pink: ADES).
Aside from favorable peer comps, the company's growth rates suggest that the stock may be even more undervalued. TTM revenue growth clocked in at over 50% year over year, which suggests that its price-earnings ratio should be trading closer to 50x, assuming that a 1.0x price-earnings to growth ratio is normal. Despite the growth, its price-earnings ratio stood at just 8.8x over the TTM period.
Near-term Catalysts
Cemtrex's valuation is likely discounted for a few different reasons. With a listing on the OTCQB stock exchange, the company has a limited ability to reach out to institutional investors that may be interested in purchasing its stock. Many mutual funds and other investment vehicles are actually prohibited by law or contract from investing in these types of securities regardless of their intrinsic qualities.
The company plans to up-list to the NASDAQ stock exchange in the near future to resolve these issues, which could provide a significant catalyst for existing investors. By trading on the NASDAQ, the company will be able to reach a larger audience of potential investors that could help improve liquidity and close the valuation gap between the stock and many of its peers in the environmental space.
Aside from its up-listing, the company continues to reach operational milestones that could accelerate its financial performance. A new $1 million order from a wearable device manufacturer in early April represents just one of many such contracts that promise to create new revenue channels and improve the stock's underlying fundamentals and valuation over time.
Looking Ahead
Cemtrex represents a compelling investment opportunity given its robust operational performance, compelling valuation relative to peers, and numerous upcoming catalysts. In addition, investors interested in socially conscious may be particularly interested given the positive impact that the company has on the environmental through its monitoring technologies.
Moving forward, investors can look forward to additional operational announcements showing continued growth, a potential up-listing to the NASDAQ stock exchange, and perhaps a fairer valuation as the market begins to realize that the stock is trading at a discount to both its industry peers and its intrinsic valuation as judged by its 50%+ annualized growth rates.
For more information, visit the company's website at www.cemtrex.com.
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