Assessing Chart Industries (GTLS) Valuation As Shares Trade Near Estimated 13% Discount To Intrinsic Value

Why Chart Industries Stock Is Back On Investors’ Radar

Chart Industries (GTLS) is drawing attention after recent trading around US$207.96, with investors weighing its current valuation against an intrinsic value estimate that implies roughly a 13% discount.

See our latest analysis for Chart Industries.

While the share price has barely shifted in recent weeks, the stronger 1 year total shareholder return of 31.74% and 3 year total shareholder return of 87.05% suggest momentum has been building over a longer horizon, alongside the current valuation discount.

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So with Chart Industries trading around US$207.96, an estimated 13% below one intrinsic value estimate but close to its analyst price target, should you view this as a potential mispricing or assume the market is already factoring in expected future growth?

Preferred Price-to-Sales Multiple of 2.4x: Is It Justified?

On a P/S basis, Chart Industries trades at roughly 2.4x sales, which screens as cheaper than peers on one measure but richer on another.

The P/S ratio compares the value the market places on a company to its revenue, so it is often used when earnings are patchy or the company is loss making. For Chart Industries, this lens is particularly relevant because the company reported a loss of $46.7m on revenue of $4.1b and is currently unprofitable.

Relative to peers, Chart Industries looks inexpensive when you compare its 2.4x P/S to the peer average of 3.8x, which suggests investors are paying less revenue per dollar than for similar companies. However, the same 2.4x P/S is described as expensive versus both the US Machinery industry average of 2x and an estimated fair P/S of 2x, which hints at a level the multiple could gravitate toward if sentiment or expectations moderate.

Explore the SWS fair ratio for Chart Industries

Result: Price-to-sales of 2.4x (ABOUT RIGHT)

However, you also need to factor in risks such as current unprofitability with a reported US$46.7m loss, as well as any shift in sentiment toward higher P/S multiples.

Find out about the key risks to this Chart Industries narrative.

Another Angle on Value: Cash Flows Paint a Different Picture

While the P/S ratio suggests Chart Industries is only roughly in line with fair value, the SWS DCF model points to a different takeaway, with an estimated future cash flow value of about $238 per share versus the current $207.96. This raises the question of which signal you trust more.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Chart Industries for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 49 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Seeing mixed signals so far and wondering what really matters most for your thesis? Act quickly, dig into the underlying figures yourself, and weigh both sides with the help of 2 key rewards and 1 important warning sign

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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