China Advanced Construction Materials Group Inc (NASDAQ: CADC) is having an incredibly strong day in the market today after releasing their earnings report for the third quarter. Today, we'll talk about what we saw from the report, how the stock is reacting to the news, and what we'll be watching for with regard to CADC ahead.
CADC Reports Earnings
As mentioned above, China Advanced Construction Materials Group is having an incredibly strong day in the market today after reporting its earnings for the third quarter. Here's what we saw from the earnings report:
- Revenue – In terms of revenue, CADC did overwhelmingly well. During the quarter, the company generated revenue of about $13.8 million. That's a massive improvement year over year from $7.5 million. The increase in revenue is largely due to an increase in sales volume of 56% as a result of customers expediting their construction progress before the severe winter ahead. Also, an increase in the selling price of concrete by 19% played a key role in the increased revenue.
- Cost Of Revenue – Total cost of revenue came in at about $12.3 million. That figure proved to increase by 47% as a result of an increase of production volume. However, the cost was offset by a decrease in the unit production cost of 19%.
- Gross Profit – Finally, gross profit came in at approximately $1.4 million. That's compared to a $1 million gross loss in the same quarter 1 year ago.
The company pointed to their ability to continue at a strong pace due to the following factors:
- Large-Scale Contractor Relationships – CADC informed investors that they have contracts with major construction contractors that are key to infrastructure, commercial and residential projects. With a sales effort focused on large-scale products and large customers, the company operates with less risk.
- Management – CADC also reminded investors that the management team has vast experience; providing technical knowledge and business relationships that give them an upper hand in the market.
In a statement, the company offered the following:
“Our management believes that we have the ability to capture a greater share of the Beijing market via expanding relationships and networking, signing new contracts, and continually developing market-leading innovative and eco-friendly ready-mix concrete products.”
What We're Seeing From The Stock
At the end of the day, strong earnings tend to cause strong movements in the market. However, no one could have expected the massive gains we're seeing out of this one. Of course, our partners were the first to alert us to the movement. At the moment (11:14), CADC is trading at $7.90 per share after a gain of $5.70 per share or 259.09% thus far today.
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What We'll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on CADC. In particular, we're interested in following the company's ongoing innovation in the building materials sector. We're also interested in seeing if the large-scale efforts will bear fruit when it comes to maintaining growth through winter. Nonetheless, we'll continue to follow the story and bring the news to you as it breaks!
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