Ceco Environmental (CECO) AI Stock Analysis

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Ceco Environmental

(NASDAQ:CECO)

Rating:77Outperform

Price Target:―

CECO Environmental shows strong financial performance with significant revenue and backlog growth, and has a solid strategic outlook. Technical indicators suggest some caution due to the potential for overbought conditions, but the overall valuation is fair. The earnings call highlights both positive momentum and some challenges, which are balanced in the overall assessment.

Positive Factors

Demand and Backlog

Backlog grew to $602M at the end of 1Q25 compared to $541M at the end of 4Q24, indicating strong future demand.

Financial Performance

Stronger than expected 1Q25 results have driven the upgrade to a Buy rating.

Revenue Growth

Q1 revenues increased 40% (+13% organic), well above consensus estimates of 20% growth.

Negative Factors

Execution Risks

Risks such as execution, regulatory, and merger integration could impact the company's performance.

Stock Price Volatility

The stock recently saw a pullback driven by lower-than-guided revenue execution for 2024.

Ceco Environmental (CECO) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$964.23M

Dividend YieldN/A

Average Volume (3M)291.61K

Price to Earnings (P/E)21.1

Beta (1Y)1.38

Revenue Growth8.89%

EPS Growth278.44%

CountryUS

Employees1,600

SectorIndustrials

Sector Strength90

IndustryIndustrial - Pollution & Treatment Controls

Share Statistics

EPS (TTM)0.10

Shares Outstanding35,267,940

10 Day Avg. Volume204,934

30 Day Avg. Volume291,606

Financial Highlights & Ratios

PEG Ratio0.07

Price to Book (P/B)3.07

Price to Sales (P/S)0.00

P/FCF Ratio75.78

Enterprise Value/Market Cap1.14

Enterprise Value/Revenue0.48

Enterprise Value/Gross Profit5.21

Enterprise Value/Ebitda4.30

Forecast

1Y Price Target

$33.67

Price Target Upside23.15% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering6

Ceco Environmental Business Overview & Revenue Model

Company DescriptionCECO Environmental Corp. provides industrial air quality and fluid handling systems worldwide. It operates in two segments: Engineered Systems Segment and Industrial Process Solutions Segment. The company engineers, designs, builds, and installs systems that capture, clean, and destroy air- and water-borne emissions from industrial facilities as well as fluid handling, gas separation, and filtration systems. It offers dampers and diverters, selective catalytic reduction and selective non-catalytic reduction systems, cyclonic technology, thermal oxidizers, filtration systems, scrubbers, and water and fluid handling equipment, as well as plant engineering services and engineered design build fabrication. The company markets its products and services to natural gas processors, transmission and distribution companies, refineries, power generators, industrial manufacturing, engineering and construction companies, semiconductor manufacturers, compressor manufacturers, beverage can manufacturers, metals and minerals, and electric vehicle producer companies. CECO Environmental Corp. was incorporated in 1966 and is headquartered in Dallas, Texas.

How the Company Makes MoneyCECO Environmental makes money through the sale of its diverse range of products and services designed to improve air quality and manage industrial emissions. The company's revenue streams primarily include the sale of air pollution control systems, such as scrubbers and baghouses, as well as fluid handling equipment like pumps and valves. CECO also generates income from providing engineering services, installation, and maintenance of their systems. Significant factors contributing to its earnings include regulatory requirements for emissions reduction across various industries and its ability to deliver customized solutions that meet specific industrial needs. Partnerships with industrial clients and government agencies further bolster its revenue generation capabilities.

Ceco Environmental Financial Statement Overview

Summary

Ceco Environmental demonstrates solid financial health with strong revenue and profit growth, a stable balance sheet with low leverage, and positive free cash flow. While profitability and cash flow metrics suggest opportunities for enhancement, the company is well-positioned for future growth in the industrial pollution and treatment controls sector.

Income Statement

Very Positive

Ceco Environmental has shown strong revenue growth with a TTM revenue of $608.3M, up from $557.9M in the prior year. Gross profit margin improved to 34.7%, and the net profit margin increased to 7.8%, indicating enhanced profitability. The EBIT margin also improved significantly to 14.9%, reflecting better operational efficiency.

Balance Sheet

Positive

The company's balance sheet is robust with a debt-to-equity ratio of 0.08, indicating low leverage. The equity ratio stands at 29.9%, showing a stable equity base. However, the return on equity is moderate at 16.6%, suggesting room for improvement in asset utilization.

Cash Flow

Positive

Ceco Environmental's cash flow position is stable with a positive free cash flow of $15.0M. The operating cash flow to net income ratio is 0.25, which is relatively low, suggesting opportunities for improving cash generation relative to earnings.

TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
608.30M	557.93M	544.85M	422.63M	324.14M	316.01M
	Gross Profit
210.98M	196.15M	171.02M	128.22M	100.92M	105.13M
	EBIT
90.71M	35.40M	34.57M	34.89M	9.86M	21.44M
	EBITDA
101.98M	45.23M	47.45M	38.33M	21.89M	30.52M
	Net Income Common Stockholders
47.43M	12.96M	12.91M	17.42M	1.98M	8.21M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
146.47M	37.83M	54.78M	45.52M	29.90M	35.99M
	Total Assets
957.10M	759.70M	600.29M	504.72M	416.20M	419.31M
	Total Debt
363.84M	245.07M	155.48M	119.66M	72.54M	81.93M
	Net Debt
217.37M	207.24M	100.70M	74.14M	42.64M	45.93M
	Total Liabilities
667.04M	507.81M	362.80M	286.57M	210.24M	215.70M
	Stockholders Equity
285.79M	247.69M	232.64M	213.22M	204.55M	202.66M
Cash Flow		Free Cash Flow
11.64M	7.46M	36.26M	26.27M	10.68M	476.00K
	Operating Cash Flow
11.91M	24.83M	44.65M	29.65M	13.30M	4.42M
	Investing Cash Flow
-97.79M	-105.31M	-56.49M	-48.26M	-2.08M	-9.23M
	Financing Cash Flow
188.19M	65.91M	21.14M	38.18M	-15.56M	3.72M

Ceco Environmental Technical Analysis

Technical Analysis Sentiment

Positive

Last Price27.34

Price Trends

50DMA

23.04

Positive

100DMA

25.32

Positive

200DMA

26.70

Positive

Market Momentum

MACD

1.45

Negative

RSI

68.20

Neutral

STOCH

81.66

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CECO, the sentiment is Positive. The current price of 27.34 is above the 20-day moving average (MA) of 25.17, above the 50-day MA of 23.04, and above the 200-day MA of 26.70, indicating a bullish trend. The MACD of 1.45 indicates Negative momentum. The RSI at 68.20 is Neutral, neither overbought nor oversold. The STOCH value of 81.66 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CECO.

Ceco Environmental Risk Analysis

Ceco Environmental disclosed 41 risk factors in its most recent earnings report. Ceco Environmental reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 1 New Risks

Failure to maintain adequate internal controls could adversely affect our business. Q4, 2024

Ceco Environmental Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CECO	77 Outperform	$964.23M	21.11	18.34%	―	8.89%	278.44%
Sector *	64 Neutral	$4.39B	11.81	5.17%	249.38%	3.98%	-12.17%
ERII	64 Neutral	$703.58M	34.69	10.35%	―	10.93%	6.99%
FTEK	57 Neutral	$51.71M	―	-6.95%	―	7.30%	-247.48%
TOMZ	55 Neutral	$16.87M	―	-62.68%	―	19.09%	3.50%
CLIR	54 Neutral	$32.75M	―	-75.96%	―	10.88%	3.57%
LIQT	47 Neutral	$14.42M	―	-69.66%	―	-17.77%	0.86%

* Industrials Sector Average

Performance Comparison

CECO

Ceco Environmental

27.34

1.40

5.40%

ERII

Energy Recovery

12.45

-1.13

-8.32%

FTEK

Fuel Tech

1.68

0.50

42.37%

CLIR

ClearSign Combustion

0.62

-0.28

-31.11%

LIQT

LiqTech International

1.62

-1.07

-39.78%

TOMZ

TOMI Environmental Solutions

0.84

0.03

3.70%

Ceco Environmental Earnings Call Summary

Earnings Call Date:Apr 29, 2025

(Q1-2025)

% Change Since: 42.40%|

Next Earnings Date:Aug 12, 2025

Earnings Call Sentiment Positive

CECO Environmental reported strong financial performance with record bookings and backlog growth, supported by a robust sales pipeline. However, challenges such as tariff-related costs and lower-than-expected EBITDA margins due to increased expenses were also highlighted.

Q1-2025 Updates

Positive Updates

Record Bookings Achieved

CECO Environmental reported record Q1 bookings of approximately $228 million, marking a 57% increase year-over-year without a large order in power generation or produced water treatment markets.

Strong Backlog Growth

The company exited the quarter with a backlog of $602 million, up 55% year-over-year, and approximately $60 million higher sequentially, driven by another record quarter of new orders.

Increased Sales Pipeline

CECO's sales pipeline has grown from $4.5 billion to over $5 billion for the first time, including almost a dozen opportunities each greater than $50 million in value.

Revenue Growth

Q1 revenue reached $177 million, up 40% year-over-year, with 28% driven by recent acquisitions.

Positive Adjusted EPS

Adjusted EPS for the quarter was $0.10, which was above consensus.

Successful Acquisition Integration

The acquisition of Profire Energy is off to a strong start, producing high levels of bookings and revenues, and delivering on identified synergies.

Negative Updates

Tariff Challenges

Concerns about potential impacts of tariffs on supply chain costs and overall economy were discussed. Estimated gross tariff exposure is between $3 to $10 million.

Adjusted EBITDA Margins

Adjusted EBITDA margins in the quarter were approximately 8%, which fell short of expectations due to higher selling, engineering, and project execution expenses.

Increased Interest Expense

Higher interest expenses were noted, which impacted adjusted EPS.

Company Guidance

During CECO Environmental's first-quarter 2025 earnings call, the company reported record bookings of approximately $228 million, a 57% increase year-over-year, and highlighted a robust sales pipeline now exceeding $5 billion. The company's backlog reached $602 million, up 55% from the previous year. CECO maintained its full-year 2025 guidance, forecasting revenues between $700 million and $750 million, with adjusted EBITDA projected at $90 million to $100 million. Adjusted EPS was $0.10, above consensus, while adjusted EBITDA for the quarter was $14 million, slightly exceeding expectations. Despite uncertainties related to tariffs and supply chain costs, CECO has initiated price and productivity measures to mitigate potential impacts while benefiting from a geographically aligned supply chain.

Ceco Environmental Corporate Events

Executive/Board ChangesShareholder Meetings

CECO Environmental Holds Annual Stockholder Meeting

Neutral

May 22, 2025

On May 20, 2025, CECO Environmental Corp. held its annual meeting of stockholders where eight directors were elected, executive compensation was approved, and Deloitte was ratified as the independent auditor for fiscal 2025. The meeting also established an annual advisory vote on executive compensation, reflecting shareholder engagement in governance matters.

The most recent analyst rating on (CECO) stock is a Buy with a $35.00 price target. To see the full list of analyst forecasts on Ceco Environmental stock, see the CECO Stock Forecast page.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.