Perma-Pipe Surges 43% in 6 Months: Should You Buy the Stock?

Core Viewpoint - Perma-Pipe International Holdings, Inc. (PPIH) has significantly outperformed its industry peers, with a 42.7% increase in share price over the past six months, driven by strategic expansions and strong project awards [1][4]. Company Overview - Perma-Pipe is a Delaware-based company specializing in engineering, manufacturing, and selling specialty piping and leak detection systems for various applications, including district energy and oil and gas pipelines [3]. - The company operates globally with facilities in North America, the Middle East, India, and Egypt, emphasizing quality and engineering expertise as competitive advantages [3]. Growth Drivers - The company's growth is bolstered by its recent approval from Saudi Aramco, allowing direct access to the oil and gas infrastructure market in Saudi Arabia, enhancing its participation in the pipe coating sector [4]. - A strong increase in project awards, totaling $52 million in the third quarter of 2025, reflects heightened demand for its engineered piping systems [5]. - The growing backlog of projects provides operational stability and future revenue visibility, supporting better resource planning [6]. Financial Performance - In the first nine months of fiscal 2025, PPIH reported a 37% increase in net sales year over year, totaling $155.8 million, with gross profit rising to $52.2 million and net income increasing to $12.1 million from $7.2 million the previous year [7]. - Investments in local capacity, particularly the expansion of the Dammam facility in Saudi Arabia, have enhanced production capabilities and improved project execution [8]. Challenges - The company faced challenges, including a $6.7 million increase in general and administrative expenses and high debt levels of $29.7 million, which could impact financial accuracy and oversight [9]. Valuation - PPIH is currently trading at 1.23X trailing 12-month EV/sales, below the industry average of 2.39X and lower than peers Valmont Industries (2.25X) and Tenaris (1.8X) [10]. Conclusion - The strategic expansion into Saudi Arabia and a growing project backlog position PPIH as a compelling long-term investment opportunity in critical infrastructure markets, despite elevated operating costs and high debt levels [11].