From Ink Research this MorningMorning Report: Atlas Engineered Products nails Q3 results December 5, 2022 Canada's morning overview of insider filings with a special focus on companies that may interest active and momentum-oriented investors.
Overview: Sentiment and Stocks Construction wood products firm Atlas Engineered Products (AEP) made a timely appearance in our INK Top 40 list on November 16th, a few days before it surprised the market with upbeat Q3 results on November 24th. AEP reported Q3 revenue of $17.64 million, up from $17.56 million in Q3 2021. That allayed some fears about the company's ability to withstand a higher interest rate environment. Importantly, gross profit margin grew to 35% from 31% in the comparable period and income came in at $0.05 per diluted share, up from $0.04 in Q3 2021.
AEP's growth by acquisition strategy seems to be working this year and the market seems to like it. Most recently, it has been working to realize labour, shipping, and equipment synergies from its Hi-Tec Industries acquisition in February. In Q3, Hi-Tec operations contributed $1.59 million in revenue and $439,337 in EBITDA. AEP CEO Hadai Abassi remarked that AEP's "order book for the remainder of 2022 continues to be strong and we anticipate another year of record results."
The stock gapped up 12.3% the day following the release of Q3 results and set a 52-week high of $0.76 on Friday. However, its valuations remain relatively attractive with a trailing 12-months P/E of 5.0 according to Refinitiv data. Since we last featured AEP here on March 9th, the stock is up 26.7%. There has been some small selling recently, but that has not hurt the stock's overall INK Edge outlook ranking which remains sunny, putting it in the top 10% of all stocks ranked.
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Today's Chart Atlas Engineered Products Ltd. (AEP) Chart reflects public-market and option-exercise transactions of common shares (unit trusts) by company officers and directors. USD transactions are converted to Canadian dollars by us using the Bank of Canada noon rate on the transaction date. From November 28th to November 30th, Atlas Engineered Products (AEP) Chief Operating Officer Gurmit Dhaliwal sold a total of 27,500 common shares at an average price of $0.70. Small sales can sometimes be seen as a positive signal. Indeed, given the stock's sharp rise, it is encouraging that there has not been more insider selling.
Mr. Dhaliwal is the fourth-largest insider equity holder at the company with 2.69% of shares outstanding. In addition, on November 4th a pair of directors acquired a total of 200,000 common shares through options exercises at an exercise price of $0.49. Earlier, on September 20th,
Director Gianpaolo Andreola (URL) bought a total of 96,000 common shares on a direct ownership basis at an average price of $0.48. Mr. Andreola is the third-largest insider equity holder at the company with 2.98% of shares outstanding. Finally, from September 6th to December 1st, Atlas Engineered Products bought back a total of 1,616,286 common shares at an average price of $0.57 (not shown on chart). That works out to an estimated trailing 12-months buyback yield of 0.9%.
Atlas Engineered Products has above median ownership (direct & indirect holdings) by Officers and Directors compared to other micro-cap stocks in the Basic Materials sector according to SEDI filings as of December 4th, 2022. Atlas Engineered Products currently holds a sunny INK Edge outlook on the equally weighted V.I.P. criteria of valuations, insider commitment, and price momentum which places it in the top 10% of all stocks ranked.
INK outlook categories are designed to identify groups of stocks that have the potential to out or underperform the market. However, any individual stock could surprise on the up or downside. As such, outlook categories are not meant to be stock-specific recommendations.