Will Recent Uptrend Of Emeco Holdings Sustain?

  • Mar 15, 2019 AEDT
  • Team Kalkine
Will Recent Uptrend Of Emeco Holdings Sustain?

Emeco Holdings Limited (ASX: EHL) is a company from the industrial sector and is engaged in providing heavy earthmoving equipment and their rental and maintenance services to miners and contractors in Australia and overseas.

Since 4 January 2019 (Day?s Low of A$1.860), the stock witnessed an upward movement till 13 February (Day?s High of A$2.895). From then, the stock corrected itself till 13 March (Day?s Low of A$1.875), from where it picked up rally phase.

On 14 March 2019, the share price of EHL zoomed up by 4.103 %. The opening price of the shares was A$1.900, which was the lowest price of the day. It went as high as A$2.040, closing by the end of the trading session at A$2.030, which was 0.08 points above its previous trading day?s closing price.

Today, on 15 March 2019, the stock is 7.39% up, trading at A$2.180 (as at 1:10 PM AEST, 15 March). The company has a market capitalization of A$656.12 million with approximately 323.21 million outstanding shares.

On 19 February 2019, the company declared its half-yearly results where the operating EBITDA in 1H FY2019 increased by 53.4% to $102.8 million. The NPAT during the period was reported as $31.7 million which was up by 159.8% on 1H FY2018. For Emeco, the period 1HFY2019 reported continuous earnings growth, margin improvement, increased utilization and reduced leverage. As a result of strong growth in the ongoing demand, the company purchased additional core assets to drive its continuous growth.

Although the business and financial performance remained strong during the period, the share price of EHL tumbled on that day. However, on 20 February 2019, the share price zoomed up and closed at A$2.42 after the company shared the asset purchase supplementary information in response to the queries received after the declaration of the interim results.

The probable reason which influenced the share price on 14 March 2019:

One of the probable reasons for the recent upward movement in the share price is due to the sectoral impact. The S&P/ASX 200 Industrials (Sector) witnessed a growth of 0.37% to A$6,204.8. The index reported an increase of 23.1 points as compared to its last closing price.

If we follow the chart, we can see that the candlesticks were moving downwards towards the support for around 20 to 25 days. On 13 March 2019, a hammer candlestick was formed which indicates a probability of the trend reversal.

?A support level is there at A$1.860. On 14th March, a bull engulfing candlestick emerged on charts. This engulfing candlestick pattern has nearly touched the support level which indicates that prices might move in the upward direction.

Investors may want to keep the stock in their watchlist to see if the recent uptrend sustains.


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