RBC Capital Markets adjusted its price target for Atlas (NYSE:ATCO) Energy Solutions Inc (NYSE: AESI), a low-cost sand provider, to $26.00, down from the previous $27.00. Despite this reduction, the firm maintained its Outperform rating on the stock in view of the company's second-quarter 2024 results, which aligned with expectations.
Atlas Energy Solutions reported an increase in the visibility of its Dune Express volume and announced a 4.5% rise in its dividend. RBC Capital noted Atlas' strong growth potential, strong profit margins, and increased market share following the acquisition of Hi-Crush. These factors support the Outperform rating, according to the firm.
The financial institution pointed out Atlas Energy Solutions' competitive advantage as a low-cost sand provider and its strategic moves that have bolstered its position in the market. The recent acquisition of Hi-Crush is particularly notable as it has expanded the company's market share.
RBC Capital also noted the company's valuation, with a 2025 estimated EV/EBITDA multiple of 4.4 times, which is considered reasonable when weighed against the company's growth prospects and margin performance.
The valuation metric is an important indicator of a company's earnings before interest, taxes, depreciation, and amortization relative to its enterprise value, and is often used to assess the attractiveness of a stock.
Atlas Energy reported impressive Q2 results, overcoming industry challenges. Despite a fire at their Kermit plant, the company saw revenues surge by 49% to $288 million, with adjusted EBITDA reaching $72 million. They also announced a dividend increase to $0.23 per share. Furthermore, Atlas Energy is maintaining a strong presence in the Permian proppant market and plans to ramp up production next quarter.
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