Under-the-radar ASX small-cap stock Austin Engineering Ltd (ASX: ANG) has just capped off a very good year for its shareholders.
Austin Engineering shares closed yesterday at 52 cents. In morning trade on Friday, shares in the global, mining-focused engineering company are trading 1.3% higher at 53 cents apiece. That brings the Austin Engineering share price up 71% over 12 months.
For some context, the All Ordinaries Index (ASX: XAO) has gained 12% over this same period.
The engineering company currently has a market cap of $329 million. Shares also trade on a fully franked 2.3% trailing dividend yield.
And according to Bell Potter this small-cap ASX stock is well-placed to keep on charging higher in 2025.
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ASX small-cap stock tipped to outperform again in 2025
Bell Potter believes that Austin Engineering is "undervalued" relative to its peers. The ASX small-cap stock trades on a price-to-earnings (P/E) ratio of around 10.5 times.
According to Bell Potter's Marcus Barnard (quoted by The Australian Financial Review), "features such as lower weight, ability to customise to mine requirements and fabrication proximity to client" provide Austin Engineering with its high customer retention rates, a competitive advantage over its peers and "strong" intellectual property.
"There are several companies competing in Australia," Barnard said. He noted that Austin Engineering "could potentially acquire a competitor and achieve synergies".
Bell Potter initiated a buy rating on the ASX small-cap stock with an 86 cent price target. That represents a potential upside of more than 62% from current levels.
What's been happening with Austin Engineering?
Austin Engineering reported its full-year (FY 2024) results on 27 August.
Highlights included a 21% year-on-year increase in revenue to $313.2 million, with revenue improvements reported across all its operating regions.
Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $46.6 million was up 48.9% from FY 2023. And underlying net profit after tax (NPAT) of $31.0 million increased by 71.3%.
At the end of the financial year, the ASX small-cap stock had net cash holdings of $9.6 million.
Looking ahead, the company is forecasting FY 2025 revenue of approximately $350 million, some 11% higher than in FY 2024.
Commenting on the performance that helped drive the ASX small-cap stock's success over the year, Austin CEO David Singleton said at the time:
The results reflect a doubling down on our Austin 2.0 operational strategy, which has led to increases in revenue, forward order book, and a much stronger cashflow position at the end of the year.
Our improved financial performance has been driven by a series of initiatives designed to enhance operating efficiencies and lower costs across our business units, which has led to a continued growth in margins.
