Should You Buy Apr Energy PLC After Today’s Impressive Set Of Results?

Should you buy Apr Energy PLC (LON: APR) after today’s results?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

sdf

Fast-track power solutions business, Apr Energy (LSE: APR) delivered an impressive second-quarter trading update today. The company revealed second quarter revenues of $134m, up 203% compared to the year ago period.

Moreover, Apr revealed that during the quarter, utilisation of the company’s generator fleet remained above 70%, even after including fleet expansion of 37% to 2,194MW. Year to date, Apr has signed new contracts amounting to 142MW and extended existing customer contracts for 1,063MW, which translates into a contract renewal rate above 80%.

These are all very impressive figures, but should you buy in?

Past mistakesstock exchange

While the second quarter of this year may have been a good few months for Apr, the company is still trying to make up for past mistakes. Indeed, Apr is still trying to support a high level of debt after winning a high-profile contract within Libya to supply 1m homes with electricity.

Net debt has surged over the past few years and now stands at around $500m. Back during 2010 Apr had a net cash balance of $646m. Net debt of $500m is around ten times Apr’s 2013 reported operating income. 

Still, Apr’s management remains confident that the company’s level of debt is comfortably within financial covenants. Additionally, the group is in active discussions with its banks to undertake a refinancing, which is expected to be completed during the third quarter. 

Profits rising

Nevertheless, despite Apr’s high debt load the company’s profits are surging. Pre-tax profits hit $28m last year, or 14.4p per share. City analysts are expecting the company to report pre-tax profits of £74m this year, 62.4p per share. These figures put the company on a forward P/E of 8.2.

Further, the City has pencilled in profits of £90m, or 80.1p per share for 2015, which puts Apr on a staggeringly low 2015 P/E of 6.4.  

That’s not all. Over the long term, the sky really is the limit for Apr as the world’s demand for power continues to grow. Indeed, Apr has plenty of opportunity for growth within key markets, particularly in the market mobile gas turbines.

Management is currently focused on securing a number of longer-term, larger-scale power projects in the Americas, Africa and Asia Pacific. And Apr’s existing presence and experience within these markets should give the company an advantage over its peers. 


Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned.

More on Investing Articles

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

3 simple strategies that can help drive success in the stock market on a small budget

Christopher Ruane runs through a trio of strategic moves he reckons can help an investor as they aim to build…

Read more »

British union jack flag and Parliament house at city of Westminster in the background
Investing Articles

2 growth stocks backed by this British fund that’s soared 77.8% in just 3 years!

Our writer likes the look of this under-the-radar fund, especially with a pair of exciting growth stocks near the top…

Read more »

Shot of an young mixed-race woman using her cellphone while out cycling through the city
Investing Articles

Is there value in Baltic Classifieds — a soaring growth stock that brokers are buying?

Baltic Classifieds has surged after broker upgrades. Mark Hartley asks whether this FTSE 250 stock is really worth buying now.

Read more »

Close-up image depicting a woman in her 70s taking British bank notes from her colourful leather wallet.
Investing Articles

£20k in an ISA? Here’s how it could be used to target £423 of passive income each month

Earning money from dividends in an ISA is one way to set up passive income streams. Our writer explains how…

Read more »

Chalkboard representation of risk versus reward on a pair of scales
Investing Articles

Which is better: £100,000 or a second income of £5,481 per year?

Dividend stocks and government bonds are both worthy ways of earning a second income. But which is a better choice…

Read more »

Road 2025 to 2032 new year direction concept
Investing Articles

With interest rates falling, dividend stocks could be the key to passive income between now and 2030

In the years ahead, dividend stocks are likely to offer far more potential for passive income than savings accounts, says…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

After a 15% decline, should I move on from this FTSE 100 stock?

An investment in a FTSE 100 restructuring situation isn’t going the way our author had anticipated. Should he sit tight,…

Read more »

Pakistani multi generation family sitting around a table in a garden in Middlesbourgh, North East of England.
Investing Articles

If a 30-year-old puts £500 a month into a Stocks and Shares ISA, they could have £2.3m at retirement!

Starting early, picking wisely and investing £500 a month from age 30 might just lead to a multi-million-pound Stocks and…

Read more »