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Covanta (CVA) Surges 8%: Is This an Indication of Further Gains?

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Covanta Holding (CVA) shares ended the last trading session 8% higher at $15.04. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 0.2% loss over the past four weeks.

Covanta Holding’s first quarter earnings per share and total revenues were better than expected. The company is developing and commercializing innovative technology to further strengthen its existing operations. The company has few projects in construction phase, once completed will increase its energy generation capacity from waste and boost its cash flows.

The company lifted its 2021 guidance for adjusted EBITDA in the range of $460-$480 million from $435-$465 million and raised its free cash flow expectation from the range of $100-$140 million to $125-$155 million.

Price and Consensus

Price Consensus Chart for CVA
Price Consensus Chart for CVA

This waste disposal and renewable energy company is expected to post quarterly loss of $0.03 per share in its upcoming report, which represents a year-over-year change of +70%. Revenues are expected to be $489.2 million, up 7.8% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Covanta, the consensus EPS estimate for the quarter has been revised 28.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on CVA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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