ASX stock of the day: Why Envirosuit (ASX:EVS) shares are bouncing

The Envirosuit Ltd (ASX: EVS) share price is bouncing around in a rather dramatic fashion today. At the time of writing, Envirosuit shares are trading at 13 cents a share, an 8.33% bump. But soon after open, Envirosuit shares reached as high as 14 cents, which (due to the laws of small numbers) is a pretty hefty 16.67% rise.

Since, then the shares have obviously cooled somewhat, meaning that this company has been bumped 16.67%, and fallen 10.7%, all in one day. That kind of volatility is enough to give anyone watching whiplash.

Despite the (fleeting) move upwards this morning, Envirosuit is a company that has not had a good run over the past few months. Back in September last year, Envirosuit shares were trading as high as 26 cents a share. That means this company has fallen more than 50% in value over the past six months. 

So who is this company? And what on earth has been going on with its share price?

Enviro-Who?

Envirosuit is a tech company that specialises in technological solutions to environmental problems. The company was founded back in the 1990s, but today has offices across the Americas, Europe, Asia and Australia.

Envirosuit’s software can help monitor and manage all kinds of pollution. This includes air quality, water quality and water waste, noise pollution, vibration (such as from construction), odour, dust, and waste management.

The company’s software offers solutions in all of these fields, and is available on the cloud as a software-as-a-service (SaaS) platform.

Why is the EnviroSuit share price bouncing around today?

It’s hard to say at first glance. There has been no official major news or announcements out of Envirosuit since 26 February, when the company reported its half-year earnings to the markets. That was a pleasing result in itself though.

For the six months ending 31 December 2020, the company reported revenue growth of 17% (85% of which was recurring) against the previous half-year. It also reported that gross profits were up 49% and that earnings before interest, tax, depreciation and amortisation (EBITDA) had improved from a loss of $6.9 million in the previous half to a loss of $3.56 million in the most recent half.

But that was all reported a couple of weeks ago. So what gives?

It’s possible that the Envirosuit share price has benefitted from the rebound in ASX tech shares that we have seen across the markets today. As a small-cap tech share itself, it’s conceivable that some investors have found Envirosuit appealing under the current market conditions. It’s also possible that a large institutional investor has decided to buy a stake in this company.

As its market capitalisation is sitting at $133.4 million at the current share price, any major buying pressure does have the potential to add some havoc to the Envirosuit share price.

Whatever the reason for Envirosuit’s performance today, I’m sure its investors are feeling thankful!

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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