Motley Fool Australia

The PWR (ASX:PWH) share price is on fire today, up 6%. Here’s why

A graph ablaze with fire going up, indicating a fired up and surged share price
Image source: Getty Images

The PWR Holdings Ltd (ASX: PWH) share price is fired up today as the market reacts to the automotive cooling solutions’ half-year results. By the looks of it, the company has been firing on all cylinders during the period.

At the time of writing, the PWR share price is trading up 6.43% at $4.80.

It’s hard to stay cool with these firey results

PWR smashed last year’s revenue and profit figures during the period. Management noted this was due to deferred activities from FY20 and growth in emerging technologies and OEM products.

Revenue for the company increased by 25% to $37.2 million for the half. Earnings before interest, tax, depreciation, and amortisation (EBITDA) also increased by 60%. PWR improved EBITDA through efficiency improvements, economies of scale recognised by increased volumes, and JobKeeper payments.

Subsequently, the combination of increased revenue and improved margins delivered a 90% increase in net profit. This significant surge in profit equated to $6.58 million net profit after tax for the company.

Management has elected to increase the interim dividend to 2.8 cents per share, up 47% from 1.9 cents the prior year.

Commentary and outlook

Addressing the results, PWR managing director Kees Weel said:

We are now very well placed for our expected growth which has only just started and a 90% increase in NPAT illustrates our capability and potential. We remain focused on our strategy to grow and diversify the business into new channels, and the progress made to date in this regard is very encouraging.

PWR’s revenue remains heavily geared towards sales in the motorsport category, at 49% of total sales. However, the company noted a trend towards expansion in the emerging technologies and OEM sale streams. This marks a key driver in improving margins for the business.

Emerging technologies in focus for PWR include defence and aerospace applications, battery and hybrid system cooling, additive manufacturing applications, computational fluid dynamics (CFD) modelling services, and super alloy brazing capabilities.

PWR share price in the rearview mirror

The PWR share price has experienced a rough 12 months. Shares tumbled during the March 2020 crash from $4.88 down to a low of $2.50. However, the company kept its cool and continued to deliver for its customers. As a result, the share price has steadily climbed back to its current price tag. 

Over the past year, the PWR share price has appreciated by 0.2%. This still reflects an outperformance of the S&P/ASX 200 Index‘s (ASX: XJO) 5% loss.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of February 15th 2021

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has recommended PWR HLDING FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…