Covanta Holding Corporation
) fourth-quarter 2012 earnings of 20 cents per share missed the
Zacks Consensus Estimate of 23 cents and the year-ago-quarter
earnings of 26 cents. The decline was due to a higher effective
tax rate, increased interest expense and the negative impact of
Hurricane Sandy. These declines were partially offset by a lower
number of shares outstanding due to the company's common stock
On a reported basis, earnings came in at 62 cents per share,
compared with 19 cents per share in the same quarter last year.
Quarter in Detail
In the fourth quarter the company reported revenue of $430
million, flat year over year and beating the Zacks Consensus
Estimate of $410 million. The upside came from organic growth
initiatives in special waste, recycled metals and other; and
escalations in service fee contracts.
Operating expenses were $351 million compared with $345 million
in the year-ago period, an increase of $6 million. Benefits from
various operational improvements were more than offset by the
negative impact of Hurricane Sandy and normal cost escalations.
Covanta Holding reported that its fourth-quarter net income
attributable to the company was $82 million compared with $26
million in the same quarter last year.
In full-year 2012, earnings per share of 51 cents came below both
the Zacks Consensus Estimate and full-year 2011 number of 54
Total revenues fell $6 million year over year in 2012 to $1.6
billion, in line with the Zacks Consensus Estimate.
Shareholder Returns and Liquidity
In 2012, the company doubled its annual cash dividend to 60 cents
per share and returned $169 million to shareholders, consisting
of $81 million in cash dividends and $88 million in share
repurchases (3.9% of common stock outstanding). Since the
inception of its buyback program the company has repurchased 25.8
million shares, or 16.7% of shares outstanding, at a weighted
average cost of $16.00. As of Dec 31, 2012, Covanta had $87
million of share repurchase authorization remaining.
Covanta Holding, for full year 2013, expects adjusted earnings in
the range of $0.40-$0.50 per share.
Covanta Holding is an internationally recognized owner and
operator of large-scale Energy-from-Waste and renewable energy
projects. Covanta's 44 Energy-from-Waste facilities provide
communities with an environmentally sound solution to their solid
waste disposal needs by using municipal solid waste to generate
clean, renewable energy.
Annually, Covanta's Energy-from-Waste facilities convert
approximately 20 million tons of waste into 9 million megawatt
hours of clean renewable electricity and approximately 9 billion
pounds of steam that are sold to a variety of industries.
In recent times, stiff competition and an overall tepid
macroeconomic outlook are expected to remain headwinds. Hence,
Covanta Holding currently holds a Zacks Rank #4 (Sell).
Other alternative energy companies that are currently performing
well and warrant a look include Zacks Rank #1 (Strong Buy) stock
) and Zacks Rank #2 (Buy) stocks
Ormat Technologies Inc.
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