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Covanta (CVA) Down 45.3% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·3 mins read

It has been about a month since the last earnings report for Covanta (CVA). Shares have lost about 45.3% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Covanta Holding's Q4 Earnings & Revenues Beat Estimates

Covanta Holding delivered fourth-quarter 2019 earnings of 9 cents per share, which beat the Zacks Consensus Estimate of earnings of 7 cents by 28.6%. The figure also increased 28.6% on a year-over-year basis.


In the quarter under review, Covanta Holding’s revenues amounted to $485 million. The figure beat the Zacks Consensus Estimate of $479 million by 1.3%. However, the top line declined 3% on a year-over-year basis.

In 2019, the company posted revenues of $1,870 million, up 0.1% from $1,868 million in 2018.

Operational Update

In the reported quarter, Covanta Holding’s total adjusted operating expenses amounted to $441 million, flat year over year.

Interest expenses were $35 million, up 3% from $34 million in the prior-year quarter.

Financial Condition

Covanta Holding had cash and cash equivalents of $37 million as of Dec 31, 2019 compared with $58 million as of Dec 31, 2018.

Long-term and project debt was $2,491 million as of Dec 31, 2019 compared with $2,460 million as of Dec 31, 2018.

Net cash from operating activities at the end of 2019 was $226 million, lower than $238 million in 2018.


Covanta Holding projects 2020 adjusted EBITDA in the range of $415-$445 million and free cash flow in the band of $100-$140 million.


How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

VGM Scores

At this time, Covanta has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

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


Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. Notably, Covanta has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

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