MagneGas (MNGA) Stock: Running Up Ahead Of Earnings

Another stock making a run for the top on extremely high volume this morning is MagneGas Applied Technology Solutions Inc (NASDAQ: MNGA). The company reported sales figures for the month of October yesterday, showing strong growth on a month over month and year over year basis. Excitement is continuing as we head into earnings. Today, we’ll talk about the sales results for October, tomorrow’s expected earnings release, what we’re seeing from MNGA stock, and what we’ll be watching for ahead.

MNGA Sales Climb In October

As mentioned above, MagneGas Applied Technology Solutions is having yet another incredibly strong start to the trading session today as we near an earnings release. The gains are ultimately the result of excitemen surrounding the coming earnings report following yesterday’s news of strong sales growth. Here’s what we learned yesterday:

  • October Sales – October sales came in at a whopping $1.05 million. That represented a 180% year over year increase from the $0.37 million generated in October of 2017.
  • Texas And Louisiana – The combined Texas and Louisiana market was the largest growth market MNGA had in the month. During the month of october, sales in this market climbed 68% when compared to sales in September.
  • Southern California – The southern California market also did incredibly well, seeing month-over-month growth in sales of 15%.
  • Florida – Sales in the Florida market also saw a strong increase, gaining 9% on a month over month basis.
  • Northern California – Finally, northern California continues to be the largest revenue generating market for MNGA. Sales in this market are expected to grow on a more slow and steady basis. October sales in this market were 5% higher than September sales.

This News Provides Important Clues For Tomorrows Quarterly Report

Tomorrow, before the opening bell, MagneGas Applied Technology Solutions will report its financial results for the third quarter, and while excitement is running high at the moment, that may not be the case for very long. That is, if the clues coming out of the sales report are correct.

At the moment, it is expected that MNGA will report that Q3 revenues (revenues that include September sales), will come in around $3.13 million. At the same time, analysts are expecting that the company will report a loss of $0.12.

If we look at the sales results for October that were recently released by the company, you’ll find something concerning. The quarter included July, August and September sales. Recently, investors have cheered sales growth, but even with the growth, if all three months were as good as October, the company would barely beat revenue expectations. Considering that October was far better than September, we can expect to see a miss in revenue on the earnings report.

It’s also worth mentioning that much of the revenue growth has come as the result of multiple acquisitions that have taken place throughout the year, some of which took place in the third quarter. Of course, these acquisitions come with a cost to MNGA. Considering the large costs associated with the acquisitions, net income is likely to be lower than expected. Of course, excluding one-time costs, the company has a chance of hitting expectations, but we’re still expecting to see a miss.

What We’re Seeing From The Stock 

Regardless of the signs that tomorrow morning’s earnings release isn’t likely to be a great one, investors are excited with strong sales growth from MagneGas in mind. So, it’s not surprising to see that they’re sending the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (10:23), MNGA is trading at $0.40 per share after a gain of $0.039 per share or 10.83% 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 MNGA. In particular, we’re interested in following the earnings release that is coming tomorrow. While we do expect for the company to miss expectations, there is a silver lining here. With the strong October sales growth, investor sentiment is high. Should this growth continue, the stock is highly undervalued. So, even with a miss, as long as it’s not too bad, the stock may continue upward. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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