One-glance verdict
Overvalued
$-7.51 our estimate vs market $71.53
Wall Street consensus: $109.14 (-1,552.4% lower than our fair-value estimate)
1052% below our estimate, beyond the bull case
Fundamentals snapshot
CECO Environmental Corp.
CECO · NMS · Industrials · Pollution & Treatment Controls
Current price
$71.53
52-week range
$42.82 - $101.24
Market cap
$4.19B
Balance sheet
Distressed
2.47x Stretched
Net debt $710.76M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 16.6% last year.
- Reward Free cash flow was positive in 9/10 years.
- Risk Net debt grew 167.4% over 3 years.
- Risk Return on equity was -2.4% last year — the company lost money on shareholders' equity.
What this company does
CECO Environmental Corp.
CECO Environmental builds and sells the heavy-duty equipment that factories use to control air pollution and treat industrial water. Their business mainly involves providing these essential systems, like giant filters and scrubbers, to a wide range of customers from car manufacturers to energy producers. As environmental regulations become stricter worldwide, the demand for CECO's pollution-control solutions often increases.
How the company got here
Founded in 1966, CECO Environmental has grown significantly by acquiring other companies. This strategy of growth by acquisition (buying other companies to expand) has helped it become a major player in controlling air pollution for various industries. A key turning point was the 2013 acquisition of Met-Pro Corporation, which greatly expanded its size and what it could offer. More recently, the company has been focusing on growing its industrial water and energy transition businesses through strategic purchases.
What it actually does
CECO Environmental helps other industrial companies operate in a cleaner and safer way. Think of them as a provider of high-tech cleanup and safety equipment for factories and power plants. They make systems that reduce air pollution, treat industrial water, and help companies in the energy sector be more efficient and environmentally friendly. Their products are custom-designed to solve specific problems for their customers in industries like power generation, oil and gas, and manufacturing.
Engineered Systems
This is the company's largest segment and focuses on creating custom, large-scale solutions for industrial customers. Imagine a power plant needing a giant, complex system to clean its exhaust before it goes into the air; this segment would design and build that. They provide things like air pollution control systems, equipment to manage noise from industrial machinery, and systems to separate different materials. Customers in the power generation, oil and gas, and water treatment industries pay for these highly specialized, project-based systems.
Industrial Process Solutions
This part of the business provides more standardized products and services that are used within a factory's operations. This includes things like industrial filters to clean air, pumps for moving fluids, and systems to control contaminated exhaust air. For example, a car manufacturing plant might buy filtration systems from this segment to keep the air in their paint shop clean. This segment serves a wide variety of industries, including food and beverage, electronics, and automotive manufacturing, and provides a steady stream of revenue from the sale of products and replacement parts.
What management is betting on now
The company's leadership is focused on growing in the areas of industrial water treatment and solutions for the energy transition (the global shift toward more sustainable energy sources). They are actively acquiring companies in these areas to build up their expertise and product offerings. Management is also aiming to increase the company's profitability by focusing on higher-margin (the percentage of revenue a company keeps as profit) products and services. Another key part of their strategy is to increase the amount of their business that comes from shorter-term projects and recurring revenue from parts and services, which makes their financial results more predictable.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$11.11M
FY2024 Q4
$-4.30M
FY2025 Q1
$-15.08M
FY2025 Q2
$-8.71M
FY2025 Q3
$11.02M
FY2025 Q4
$7.29M
FY2026 Q1
$-15.69M
FY2026 Q2
$-24.22M
Revenue
$284.96M
Net income
$-34.77M
Diluted EPS
-0.80
Operating cash flow
$-19.33M
Free cash flow
$-24.22M
Fetching…
Sources
Revenue
$205.92M
Net income
$-398.00K
Diluted EPS
-0.01
Operating cash flow
$-13.10M
Free cash flow
$-15.69M
Fetching…
Sources
Revenue
$214.69M
Net income
$3.06M
Diluted EPS
0.09
Operating cash flow
$9.96M
Free cash flow
$7.29M
Fetching…
Sources
Revenue
$197.60M
Net income
$1.50M
Diluted EPS
0.04
Operating cash flow
$15.26M
Free cash flow
$11.02M
Fetching…
Sources
Revenue
$185.39M
Net income
$9.51M
Diluted EPS
0.26
Operating cash flow
$-7.67M
Free cash flow
$-8.71M
Fetching…
Sources
Revenue
$176.70M
Net income
$35.98M
Diluted EPS
0.98
Operating cash flow
$-11.70M
Free cash flow
$-15.08M
Fetching…
Sources
Revenue
$158.57M
Net income
$4.88M
Diluted EPS
0.14
Operating cash flow
$1.83M
Free cash flow
$-4.30M
Fetching…
Sources
Revenue
$135.51M
Net income
$2.09M
Diluted EPS
0.06
Operating cash flow
$15.11M
Free cash flow
$11.11M
Fetching…
Sources
Is it cheap or expensive?
Fair value $-7.51 vs current price $71.53
Wall Street consensus is the average analyst price target: $109.14 (-1,552.4% lower than our fair-value estimate).
Our most-likely fair value is $-7.51 a share — about 110.5% below today's price of $71.53, so the stock currently looks expensive (overvalued).
Is it drowning in debt?
Distressed
Net debt $710.8M. Interest coverage 2.5x.
Net debt
$710.76M
Interest coverage
2.47x
CECO Environmental Corp.'s profit covers its interest bill about 2.5 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
CECO
BASELINE
CECO Environmental Corp.
Total debt $771.83M Interest coverage 2.47x This is the baseline the peer rows are being compared against.
Total debt $1.06B Interest coverage 7.94x +221% vs CECO Carries about 3.2x more debt cushion than CECO.
Total debt $1.32B Interest coverage 23.03x +831% vs CECO Carries about 9.3x more debt cushion than CECO.
Total debt $550.50M Interest coverage 10.09x +308% vs CECO Carries about 4.1x more debt cushion than CECO.
Total debt $150.66M Interest coverage 9.89x +300% vs CECO Carries about 4.0x more debt cushion than CECO.
Total debt $23.48M Interest coverage 35.80x +1,348% vs CECO Carries about 14.5x more debt cushion than CECO.
What you should know
The case for and against CECO
2 Rewards
3 Risks
Rewards
-
Revenue grew 16.6% last year.
-
Free cash flow was positive in 9/10 years.
Risks
-
Net debt grew 167.4% over 3 years.
-
Return on equity was -2.4% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 6.6% to 4.9% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
22.91x
P/B
2.01x
P/S
4.64x
EV/EBITDA
53.60x
PEG ratio
1.88x
Profitability
How much profit each dollar creates
Gross margin
32.1%
Operating margin
4.9%
Net margin
-3.4%
ROE
-2.4%
ROA
1.5%
Health
Liquidity and balance-sheet strength
Debt / equity
0.37x
Current ratio
1.50x
Quick ratio
1.01x
Total debt
$771.83M
Total cash
$61.07M
Growth
How the business has been compounding
Revenue TTM
$903.17M
Revenue 5Y CAGR
24.3%
EPS TTM
-0.76
EPS 5Y CAGR
39.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$-7.20M
Free CF TTM
$-5.48M
FCF margin
-0.6%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
2017-09-14