Why the ALS Ltd (ASX:ALQ) share price zoomed higher today

One of the best performers on the local market on Wednesday has been the ALS Ltd (ASX: ALQ) share price.

In late morning trade the shares of the global provider of testing and analytical laboratory services are up over 7% to $7.99.

Why are ALS Ltd’s shares zooming higher?

This morning the company is hosting its annual general meeting and has released its presentation ahead of the event.

While the presentation focused mainly on FY 2018, it also provided management’s guidance for the first-half of FY 2019.

According to the release, the company expects underlying half-year net profit after tax from continuing operations to be in the range of $85 million and $90 million.

This will be a lift of between 18% and 25% on the prior corresponding period when the company achieved underlying net profit after tax of $71.9 million.

Management advised that this has been driven by positive returns and growth in its Environmental, Food, Pharmaceutical, Geochemistry and Tribology businesses. This has managed to offset a weak performance from its Asset Care business where trading conditions have been challenging.

Though, it is worth noting that this guidance assumes no material changes in market activity levels. Management pointed to global trade wars as a potential risk.

Based on the research notes I have seen, the market is expecting earnings growth of around 20% in FY 2019. Because of this, I can’t say I’m surprised to see its shares launch higher today.

Should you invest?

While the company looks to be on course to potentially outperform the market’s expectations this year, at 23x estimated FY 2019 earnings I would say that its shares are about fair value now.

As a result, I think there are better options in the industrials sector for investors such as Bingo Industries Ltd (ASX: BIN) and Cleanaway Waste Management Ltd (ASX: CWY).

Or one of these buy-rated shares that I'm tipping to shine in FY 2019.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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