On Dec 2, we reaffirmed our Neutral recommendation on
pollution control company
Calgon Carbon Corporation
). While the company should gain from its cost reduction and
pricing actions, it remains exposed to currency headwinds and
weakness in its equipment business.
Both revenues and earnings for the third quarter of 2013,
reported on Nov 5, matched Zacks Consensus Estimates. Calgon
Carbon swung to profit in the quarter. It saw higher sales
despite an unfavorable currency exchange impact. The company
expects fourth-quarter sales to be lower sequentially.
Calgon Carbon, a Zacks Rank #3 (Hold) stock, remains confident in
its ability to balance the need for future investment with its
responsibility to provide short-term returns. The company
continues to see 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. Its 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. It
has also embarked on aggressive cost reduction initiatives to
boost margins. The company's price increase actions should also
support sales and profitability.
However, lower sales from ballast water treatment systems
continue to hurt sales in Calgon Carbon's equipment business. It
is also seeing weak demand for activated carbon in specific
Moreover, we remain cautious about the economic challenges that
Calgon Carbon may face going forward. Moreover, unfavorable
currency exchange movements may continue to weigh on the
company's revenues. Higher costs associated with corporate
initiatives and cost improvement programs are also expected to
impact margins in the final quarter of 2013.
Other Stocks to Consider
Other companies in the pollution control industry worth
Perma-Fix Environmental Services Inc.
Sharps Compliance Corp.
). While Fuel-Tech retains a Zacks Rank #1 (Strong Buy), both
Perma-Fix and Sharps Compliance hold a Zacks Rank #2 (Buy).
CALGON CARBON (CCC): Free Stock Analysis
FUEL TECH INC (FTEK): Free Stock Analysis
PERMA-FIX ENVIR (PESI): Free Stock Analysis
SHARPS COMPLIAN (SMED): Free Stock Analysis
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