Three Contracts in Harsco's Kitty

Zacks

Harsco Corporation (HSC), a world-renowned supplier of industrial services and engineered products, recently declared winning of three prime contracts for providing its scaffolding, shoring and formwork solution services to the engineering and building projects in U.S., Germany and Austria. The awards are likely to strengthen the company’s position towards becoming a leading service provider in the engineering and construction industry.

AGRANA, a leading supplier of sugar and customized starch products in Europe has awarded the first contract to Harsco for constructing a wheat starch factory in the northeast region of Austria. The company will seamlessly deploy its rental formwork system for building several basins which are required for AGRANA’s new plant.

Harsco has received its second award from Dillinger Hutte GTS, a renowned manufacturer of steel plate in Europe. According to this contract, the company will be engaged in offering its engineered wall as well as slab formwork services in a casting plant based in Germany. This contract win is quite significant for both parties. Not only does it enhance Dillinger Hutte’s goodwill in the market, but also offers Harsco a major award, not to mention the profitable long-term alliance formed between the companies.

The company has also been chosen by Houston METRO for its light rail project in U.S. to extend its construction support services for the restoration of Main Street Bridge in Houston, Texas. Harsco’s specialized support services and in time project delivery helped it win this contract.

Management was quite excited regarding these wins by stating that these are the outcomes of Harsco’s long-lasting reputation and unblemished goodwill which helped it in expanding its businesses across regions constantly. The company is estimating that these project wins will help it produce nearly $2 million revenues in the coming quarters of fiscal 2012.

The company pertains to an industry, where ominous competition is prevalent. Hence, Harsco should stay cautious of big players, such as Hudson Technologies, Inc. (HDSN), ScanSource, Inc. (SCSC) and Aggreko plc (ARGKF).

The current Zacks Consensus Estimates for the second quarter of fiscal 2012 and for fiscal 2012 are 35 cents per share and $1.33 per share, respectively. The company currently retains a Zacks #4 Rank, which translates into a short-term ‘Sell’ rating. We also have a long-term ‘Underperform’ recommendation on the company’s stock.

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