Is PyroGenesis (TSX:PYR) stock a buy after bagging $6M deal?

Highlights 

  • PyroGenesis Canada Inc (TSX:PYR) saw its stocks surge by nearly 13 per cent to settle at C$ 5.73 on Tuesday, September 14.

  • The spike in the stock’s price came as the company announced a C$ 6 million deal with an international iron ore pelletizer.

  • On Wednesday, however, the industrials stock dipped by nearly three per cent to close at a value of C$ 5.56 per piece.

PyroGenesis Canada Inc (TSX:PYR) saw its stocks surge by nearly 13 per cent to settle at C$ 5.73 on Tuesday, September 14. The spike in the stock’s price came as the company announced a C$ 6 million deal with an international iron ore pelletizer.

On Wednesday, however, the industrials stock dipped by nearly three per cent to close at a value of C$ 5.56 per piece.

Let’s take a closer look at PyroGenesis’ latest deal and recent stock performance to gauge what could be causing this fluctuation in the stock.

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PyroGenesis Canada’s (TSX: PYR) confidential $6M deal

PyroGenesis Canada, known to specialize in plasma waste-to-energy systems and torch products, said on Tuesday that it has received an order to supply four high powered plasma torches along with ancillary equipment.

The environmental solutions provider said that the client’s name has been kept confidential for competitive reasons, although it did note that the client is a multi-billion-dollar global producer of iron ore.

It further said that the client intends to reduce greenhouse gases (GHGs) by switching its fossil fuel burners with PyroGenesis’ plasma torches.

The Montreal-based company, upon the successful implementation of four torches, could bag an additional order for 130 such plasma torches, it said.

PyroGenesis also revised the estimated net present value of each torch sale from the initial C$3 million to C$7 million, based on 20-year life.

The Canadian high tech firm designs, develops, commercializes and markets advance plasma process and sustainable solutions to reduce GHGs.

PyroGenesis Canada Inc stock performance

Stocks of PyroGenesis Canada Inc surged by about 34 per cent in the last one year. The share price also noted a significant growth of about 72 per cent in the last nine months.

PyroGenesis presently holds a high price-to-earning (P/E) ratio of 38.2 and a return on equity (ROE) of 69.74 per cent.

The industrials scrip also posts a price-to-book (P/B) ratio of 15.88 and a price-to-cash flow (P/CF) ratio of 1,060.3.

Also Read: Is Bombardier (TSX:BBD.B) stock a buy in 2021?

PyroGenesis latest financials

The Canadian company posted a revenue of C$ 8.3 million in the second quarter of 2021, up by 289 per cent year-over-year (YoY).

Its net income from operations rose 329 per cent YoY to C$ 850,859 in Q2 2021.

PyroGenesis also posted a modified EBITDA gain of C$ 1.09 million in the latest quarter, as against a loss of C$ 265,804 in Q2 2020.

Image description: Is PyroGenesis (TSX:PYR) stock a buy?

In August this year, PyroGenesis announced a C$ 1.2 million contract for delivering two Air Plasma Torch Systems to be incorporated into a medical waste destruction system. This deal, too, was struck with an unnamed player, which happens to be an existing Asian client of the company.

Apart from new projects, PyroGenesis also seems to be paying attention to business expansions. It recently acquired Montreal-based AirScience Technologies Inc, which is engaged in biogas upgrading, for an amended cash purchase price of C$ 4.4 million.

Bottom line

As industries across the world are shifting their focus to sustainable and carbon neutral approach, companies like PyroGenesis could benefit from it by remaining at the forefront of developing environment friendly solutions.

The plasma technology developer aims to benefit from the increase in the sale of plasma torches amid the rising climate change awareness.

Apart from plasma torches, the Canadian company is also said to provide waste management solutions, high-temperature metallurgical processes and turnkey solutions for global smelters.

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