HomeMost PopularIES Holdings: Energizing Growth with Strategic Acquisitions for 2024

IES Holdings: Energizing Growth with Strategic Acquisitions for 2024

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Every week, we delve into the world of stocks with the Barchart Top 100 Stocks to Buy. These are the cream of the crop, boasting the highest weighted alpha in the market. The weighted alpha considers a stock’s performance over the past year, with a focus on recent trends.

For instance, take GigaCloud Technology (GCT) with a weighted alpha of 552.50%, showcasing substantial investor interest. Moving up the ranks, we come to IES Holdings (IESC), a Houston-based powerhouse in electrical contracting and maintenance services, boasting a current market cap of $2.5 billion.

With yesterday’s weighted alpha ranking climbing to 36th, making IES an appealing prospect for momentum investors, let’s explore why this stock is making waves and catching the eye of investors.

Power Move: Strategic Acquisition Signals Growth

Recently, IES announced the acquisition of Greiner Industries, an esteemed Pennsylvania-based structural steel fabrication and services company raking in $58 million in annual revenue. This move strategically broadens IES’ reach into the lucrative Mid-Atlantic market and enriches its product offerings, setting the stage for further expansion and innovation.

Although financial specifics were not disclosed, considering IES trades at approximately 1.03 times sales, the acquisition likely set IES back around $60 million. This marks another feather in IES’ cap, following its adept acquisition of 80% of Florida-based Edmonson Electric. The judicious use of acquisitions has become a cornerstone of IES’ growth strategy, with $92 million spent on four acquisitions in the previous fiscal year.

Standing tall with $2.4 billion in revenue for 2023, IES shows a commitment to organic growth and innovation.

Spark of Growth: Surging Backlog and Financial Fortitude

IES closed Q1 with a robust backlog of $1.45 billion, a testament to its continued growth trajectory. The first quarter of 2024 saw a 10% revenue surge to $634.4 million, coupled with a 43% rise in operating income to $58.0 million. Impressively, adjusted earnings per share surged to $1.87, a 128% spike from the previous year.

While the Residential segment faced a slight dip in revenue, other segments like Communications, Infrastructure Solution, and Commercial and Industrial witnessed revenue upticks, showcasing the resilience and diversity of IES’ revenue streams.

With free cash flow hitting $154 million in 2023, zero debt on the balance sheet, and a focus on prudent reinvestment and stock buybacks, IES shines as a beacon of financial strength and flexibility in the market.

Strategic Silence: The Untapped Potential of Analyst Coverage

Surprisingly, IES, with its $2.5 billion market cap and annual revenue, stands devoid of analyst coverage. This presents a unique opportunity for investors looking to get in on the ground floor of a promising venture before institutional interest kicks in.

Currently, the CEO retains a substantial 57% ownership stake, leaving a limited float of 42% of outstanding shares. While liquidity may be a concern for some, options investors are showing interest, signaling a growing buzz around IES.

With a focused growth strategy, buoyant financials, and a market poised for further expansion, IES Holdings stands as a beacon of opportunity in the electrifying realm of stocks. Stay tuned as IES marches towards a future brimming with potential and promise.

 

More Stock Market Insights from Barchart.

At the time of publication, the author did not hold positions in any securities mentioned. The information presented is for informational purposes only. For more details, refer to the Barchart Disclosure Policy.

The opinions expressed in this article are solely those of the author.

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