Why the Emeco share price surged 22% higher today

Emeco Holdings Limited (ASX:EHL) share price has been the biggest mover on the ASX 200 index on Wednesday. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The best performer on the ASX 200 index on Wednesday has been the Emeco Holdings Limited (ASX: EHL) share price.

The shares of the leading provider of equipment leasing to the earthmoving industry rocketed as much as 22% higher to $2.01 in morning trade.

They have since pulled back a touch but are still up 16% to $1.91 at the time of writing.

Why did the Emeco share price rocket higher?

This morning Emeco released an operational update which revealed that market conditions continue to be positive.

So much so, management advised that it expects to deliver operating EBITDA in the range of $211 million to $213 million in FY 2019. This will be an increase of almost 40% on FY 2018's result.

This impressive growth has been driven by strong demand in the Eastern Rental region, particularly in the coking coal market. The company has taken advantage of this increasing demand by placing its growth assets in the region.

In the Western Rental region the company has noted a significant increase in bidding activity, which has led to Emeco winning new contracts. It is also awaiting the award of several additional major projects. In addition to this, the company advised that it has not been impacted by recent issues at certain gold projects in the region.

FY 2020 outlook.

Looking ahead, management has revealed that its outlook for FY 2020 remains strong, with total material movement continuing to increase and equipment supply remaining tight.

Furthermore, Emeco's growth capex from the recent purchase of high-utilisation assets is forecast to come in below the budgeted $90 million expenditure, and is on target to generate $25 million EBITDA in FY 2020.

Elsewhere in the resources sector today, the shares of BHP Group Ltd (ASX: BHP), Fortescue Metals Group Limited (ASX: FMG), and Rio Tinto Limited (ASX: RIO) have all stormed higher following another positive night of trade for base metals.

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.

More on Share Gainers

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today
Share Gainers

3 ASX All Ords shares up 50%+ in March

These ASX shares have been on fire this month. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Share Gainers

Why Mesoblast, Patriot Battery Metals, Sigma, and Zip shares are pushing higher

These shares are having a good session on hump day. But why?

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Consumer Staples & Discretionary Shares

If you'd put $20,000 in this ASX retail stock at the start of 2023, you'd have $134,000 now

This online retailer has executed a remarkable turnaround for its investors.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was back to earth for ASX shares this Tuesday.

Read more »