What Happened?

Shares of welding and cutting equipment manufacturer ESAB (NYSE:ESAB) jumped 11.5% in the afternoon session after the company reported impressive third-quarter earnings results that blew past analysts' revenue expectations. Its organic revenue also topped Wall Street's estimates. 

Guidance was similarly encouraging, with full year EBITDA ahead of expectations. Amid a challenging macro environment, management attributed the strong performance to exposure to high growth markets such as India and the Middle East, and a shift from less cyclical end markets. Overall, we think this was a solid quarter with some key areas of upside.

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What The Market Is Telling Us

ESAB’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. Moves this big are rare for ESAB and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 6.7% on the news that the company reported second quarter earnings results. Its organic revenue missed, and guidance was below expectations. 

In light of an operating environment that management considers "challenging," full-year core revenue guidance was lowered to a range of (2.5)% to (0.5)% (vs. previous guidance of 1.5% to 3.5%). Similarly, core adjusted EBITDA guidance was lowered to $495 to $515 million (vs. the previous estimate of $500 to $520 million). Overall, this was a mixed but overall mediocre quarter for ESAB.

ESAB is up 46.5% since the beginning of the year, and at $125.20 per share, has set a new 52-week high.

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