ATS (TSX:ATS) is a Cambridge-based company that, together with its subsidiaries, provides factory automation solutions to an international client base. Today, I want to discuss why Canadian investors should lock in equities that offer exposure to this sector. Moreover, I want to explain why this TSX stock is still worth snatching up, even after roaring out of the gate in 2023. Let’s jump in.
How has this TSX stock performed over the past year?
Shares of this TSX stock have shot up 29% in 2023 as of close on March 20. This has pushed the stock into the black in the year-over-year period. ATS had suffered a sharp dip in the late winter and early spring of 2022. However, it has bounced back nicely and surpassed the all-time highs that it had previously hit last year.
Here’s why I’m excited about ATS’s potential in the automation space
The rise of automation and its impact on the modern workplace has become a significant political, social, and economic issue. Indeed, the rise of artificial intelligence bots like ChatGPT show that there is really no limit to the potential for jobs to be automated, even in creative and academic fields.
Factory automation involves the incorporation of automation from end-to-end manufacturing processes. Last year, market researcher The Insight Partners estimated that the global factory automation market was valued at US$154 billion in 2022. The report projects that this market will be valued at US$249 billion by 2028. That would represent a compound annual growth rate (CAGR) of 8.2% over the forecast period. This growth potential should pique investor interest in this TSX stock.
Should investors be impressed by ATS’s recent earnings?
ATS released its third-quarter (Q3) fiscal 2023 results on February 9, 2023. In Q3 FY2023, the company delivered revenue growth of 18% to $647 million. Meanwhile, Order Bookings increased 45% year over year to $979 million, while its Order Backlog also rose 45% to $2.14 billion. Revenues, Order Bookings, and the Order Backlog all hit a record in the third quarter.
For the first nine months of fiscal 2023, ATS achieved revenue growth of 16% to $1.84 billion. Moreover, adjusted basic earnings per share (EPS) climbed 8.5% to $1.66. It reported Order Bookings of $2.51 billion — up from $1.81 billion in the year-to-date period in fiscal 2022.
ATS management praised its strong organic growth and announced that it had continued to successfully integrate its recent two acquisitions. On March 3, 2023, ATS announced that it had completed its acquisition of ZI-ARGUS. This leading automation systems integrator in the ASEAN region and Australia will provide further global reach for ATS.
Why this TSX stock is worth buying in late March
This TSX stock currently possesses a price-to-earnings ratio of 36. Its value is middle of the road at the time of this writing, but investors should be excited about its growth prospects this decade. Indeed, it is geared up for very strong earnings growth going forward.