We have reaffirmed our Neutral recommendation on pollution
Calgon Carbon Corporation
) following its mixed fourth-quarter 2012 results, reported on
Feb 21. Adjusted earnings topped the Zacks Consensus Estimate but
Calgon Carbon, which competes with
) among others, remains confident in its ability to balance the
need for future investment with its responsibility to provide
short-term returns. The company continues to believe ballast
water treatment, reactivation services and mercury removal as its
basis for sustainable growth. It remains actively focused on
improving margins across all regions.
Calgon Carbon's strategic initiatives position it for
significant growth in the longer term. The company's reactivation
facilities have remarkably supported its growth and have
established its presence in several markets. The global demand
for reactivation services is expected to climb as regulations for
water quality strengthen around the world.
Calgon Carbon has also reduced its exposure to rising coal
costs by identifying new sources of supply and a variety of coals
that are effective in the manufacture of its high quality
products. The company has embarked on aggressive cost reduction
initiatives to boost margins. Its cost improvement program, which
includes consolidation of operations and headcount reductions, is
expected to contribute toward margin expansion.
We, however, remain cautious about the economic challenges
that it may face going forward. Moreover, unfavorable currency
exchange movements may continue to weigh on the company's
In addition, manufacturing costs associated with production at
the Pearl River carbon manufacturing plant are expected to be a
drag on the company's gross margin in the first quarter of 2013.
Calgon Carbon's new president and CEO, Randall Dearth, has a
challenging task of keeping costs under control, a problem the
company faced in 2012. We remain on the sidelines considering
Calgon Carbon currently carries a short-term (1 to 3 months)
Zacks Rank #3 (Hold).
Other Stocks to Consider
Other companies in the pollution control industry worth
Sharps Compliance Corp.
) with both holding a Zacks Rank #2 (Buy).
CALGON CARBON (CCC): Free Stock Analysis
MFRI INC (MFRI): Free Stock Analysis Report
MEADWESTVACO CP (MWV): Free Stock Analysis
SHARPS COMPLIAN (SMED): Free Stock Analysis
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