Hudson Technologies (HDSN) Stock Explodes On DOD Deal


Hudson Technologies, Inc. (NASDAQ: HDSN)

Hudson Technologies is having an incredibly strong day in the market today, and for good reason. The company announced this morning that it has been awarded a 5 year contract with the Department of Defense, or simply DOD. Today, we’ll talk about the contract, how the market reacted to the news, and what we can expect to see from HDSN moving forward.

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HDSN Awarded DOD Deal

As mentioned above, Hudson Technologies is having an incredibly strong day in the market today. The company announced that it had been awarded a contract with the Department of Defense. Under the agreement, the contract will last for 5 years and come with a value of over $400 million.

It’s also important to note that the contract may be extended after the 5-year period, as it comes with a 5-year renewable option. During the term of the contract, the United States Department of Defense will have access to the international refrigerant services including reclamations of refrigerants and laboratory testing provided by HDSN. Following the announcement of the agreement, Kevin Zugibe, CEO and Chairman at the company, had the following to offer:

This award was two years in the making and represents a transformative win for Hudson.”

How The Market Reacted To The News

As investors, one of the first things that we learn is that the news moves the market. Any time positive news is released with regard to a publicly-traded company, we can expect to see gains in the value of the stock associated with that company. On the other hand, negative news will lead to declines in the price of the stock associated with the news. When it comes to HDSN, the news that was released was overwhelmingly positive. So, it’s no surprise that we’re seeing an overwhelmingly positive reaction in the market today. Currently (1:40), the stock is trading at $5.09 per share after a gain of $1.30 per share, or 34.30%, thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bullish opinion with regard to what we can expect from Hudson Technologies. First and foremost, the bears are going to argue that, historically, the company has seen relatively slow earnings growth. While this is the truth, moving forward, earnings growth will likely happen a bit faster. Think about it – over the next 5 years, the company will have revenue coming in from the United States Department of Defense. This revenue will total out to more than $400 million. So, we’re definitely going to see strong revenue growth during this period.

However, that’s not the only reason I maintain a bullish opinion on HDSN. At the end of the day, companies with relatively low levels of income generally have high levels of debt. After all, the growth phase of business can get very expensive. Nonetheless, the company has a debt-to-asset ratio of 7.40%. That’s incredibly low, even for well-established, highly-profitable businesses. With such a small amount of debt, a strong product, and now a contract with the DOD, I’m expecting to see growth in the stock heading forward.

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What Do You Think?

Where do you think HDSN is headed moving forward? Join the discussion at TalkTRENDZ from CNA Finance!

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