Is CVX stock a buy right now?

Following the release of the company’s fourth quarter results, Beacon Securities analyst Russell Stanley has raised his price target on Cematrix (Cematrix Stock Quote, Chart, News, Analysts, Financials TSXV:CVX).

On April 10, CVX reported its Q4 and fiscal 2023 results. In the fourth quarter, the company posted Adjusted EBITDA of $2.9-million on revenue of $19.6-million, a topline that was 136% over the same period a year prior.

“We are delighted to announce another remarkable quarter culminating in a record year that produced the best financial results in the history of the company,” CEO Jeff Kendrick said. “I am pleased to report record revenue, strong margins and a record 12-month adjusted EBITDA of $4.9-million. The record fourth quarter was the result of a push by general contractors to get work completed before the colder (subzero) temperatures arrived. Along with our solid financial performance, I would like to highlight Cematrix’s sales and sales support teams that have played a monumental part increasing market acceptance for the various applications of cellular concrete, while simultaneously landing new projects that have helped drive such positive results. The increase in our backlog to $94.9-million as at Dec. 31, 2023, in the context of record revenues on the year is a testament to the successful efforts and performance of our sales staff.”

The analyst summarized the quarter, which bested his expectations.

“Revenue/adjusted EBITDA of $19.6M/$2.9M was well ahead of our $9.5M/$0.5M forecast, and ours is the only active coverage according to FactSet,” Stanley added. “Revenue improved 135% y/y and slipped a modest 4% q/q. The Q3 performance was a record for the company, and our Q4 forecast contemplated a meaningful q/q decline owing to seasonality. While we suspected our Q4 forecast would prove to be conservative, management reported it saw a push by general contractors to complete work before cold weather arrived, driving the top-line beat. Gross margins were 636 bps ahead of forecast, and improved 457 bps q/q despite a slight decline in revenue. CVX has a largely fixed-cost structure, so the revenue and GM beat translated to adjusted EBITDA margins that were 911 bps stronger than we expected. Operating cash flow (before working capital) was more than 4x our forecast at $2.9M.”

In a research update to clients April 12, Stanley maintained his “Buy” rating but raised his price target on the stock from $0.60 to $0.70, implying a return of 79% at the time of publication.

Stanley thinks the company will post Adjusted EBITDA of $7.0-million on revenue of $63.0-million in fiscal 2024. He expects those numbers will improve to Adjusted EBITDA of $13.0-million on a topline of $82.0-million the following year.

“CVX trades at 4.4x our new F2025 adjusted EBITDA forecast, representing a 59%-61% discount to the 10.7-11.1x average at which infrastructure and cement companies trade. Potential catalysts include additional contract wins/backlog updates, and the Q1 results (expected May 8th),” the analyst added.