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Covanta (CVA) Down 1.5% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for Covanta (CVA). Shares have lost about 1.5% in that time frame, outperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Covanta due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Covanta Holding Q1 Earnings Top, Revenues Lag Estimates

Covanta Holding delivered first-quarter 2019 earnings of 3 cents per share, which beat the Zacks Consensus Estimate of loss of 16 cents. However, the figure declined from $1.53 per share in the year-ago quarter.

Revenues

In the quarter under review, the company's revenues amounted to $453 million, which missed the Zacks Consensus Estimate of $455 million by 0.45%. Also, the top line declined 1% on a year-over-year basis. The figure was impacted by lower Commodity prices.

Operational Update

Covanta Holding’s total adjusted operating expenses were $461 million, up 5.2% year over year.

Interest expenses amounted to $36 million, down 5.2% year over year.

In the first quarter, the company reached financial closure on Rookery project with the Green Investment Group.

Financial Condition

The company had cash and cash equivalents of $88 million as of Mar 31, 2019 compared with $58 million as of Dec 31, 2018.

Long-term and project debt was $2,393 million as of Mar 31, 2019 compared with $2,327 million as of Dec 31, 2018.

Net cash from operating activities in the first quarter was $37 million, up from $3 million in the year-ago quarter.

Guidance

Covanta Holding affirmed 2019 adjusted EBITDA in the range of $440-$465 million and cash available for distribution (CAFD) in the band of $120-$145 million.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -21.74% due to these changes.

VGM Scores

Currently, Covanta has a great Growth Score of A, a grade with the same score on the momentum front. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Covanta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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