H2O Innovation: Should You Buy the Post-Earnings Dip?
H2O Innovation (TSX:HEO) is a Quebec City-based company that designs and provides integrated water
treatment solutions based on membrane filtration technology. Its shares have dropped 23% in 2022 as
of close on September 29. That has pushed the stock into negative territory in the year-over-year
This is a space that investors should be eager to seek exposure to. Grand View Research recently
estimated that the global water and wastewater treatment equipment market was worth $53.2 billion in
2021. It expects this sector to deliver a compound annual growth rate (CAGR) of 5.1% over the forecast
The company released its fourth quarter and fiscal year 2022 earnings on September 28. It reported
total revenues of $184 million in fiscal 2022 – up 27% from the prior year. Meanwhile, adjusted net
earnings were reported at $8.8 million or $0.10 per share – up from $6.5 million or $0.081 per share in
fiscal 2021. Moreover, it posted adjusted EBITDA growth of 9.8% to $181 million.
H2O Innovation has delivered stronger organic revenue growth due to the synergies generated by its
aggressive acquisition strategy. Its gross profit jumped 26% from the prior year to $49.6 million.
Shares of this TSX stock plunged 6.48% on Thursday, September 29. It is trading in favourable value
territory compared to its industry peers at the time of this writing. Meanwhile, it is set to deliver strong
earnings growth going forward. I'm looking to buy the post-earnings dip before the end of September.
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