PEC Ltd.'s Financials: A Driver Behind Its Recent Stock Surge?

PEC Ltd. (SGX:IX2), a Singapore-based heavy construction company, has seen its stock price soar by +60.75% in the last 52 weeks. Investors may be wondering if the company's financial performance has played a role in this impressive run. Let's delve into PEC Ltd.'s financials to explore this possibility.

Firstly, PEC Ltd.'s margins have shown significant improvement over the past year. Gross margin increased to 23.42% in 2024, up from 20.02% in 2023. Operating margin improved to 4.54% from 2.35%, and profit margin rose to 3.26% from 1.57%. These improvements suggest enhanced operational efficiency and profitability, which could have attracted investors.



Secondly, PEC Ltd.'s free cash flow (FCF) and free cash flow margin have also improved. In the last 12 months, FCF was 31.44 million, with a margin of 6.40%. This represents a substantial turnaround from the previous year, when FCF was -9.52 million and the margin was -2.21%. The improvement in FCF and its margin indicates that the company is generating more cash from its operations, which could be another reason for the stock's recent rise.

Lastly, PEC Ltd.'s debt-to-equity ratio and interest coverage ratio have also improved, suggesting a reduction in leverage and enhanced ability to meet interest obligations. These improvements in financial metrics may have boosted investor confidence, contributing to the stock's recent rise.

In conclusion, PEC Ltd.'s improving financials, including margins, free cash flow, and debt-to-equity ratio, have likely played a role in driving its recent stock price performance. However, it is essential to consider other factors, such as market sentiment and industry trends, when evaluating the company's stock performance. As always, investors should conduct thorough research and analysis before making any investment decisions.