Why Horsehead Holding Corp's Shares Dropped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Horsehead Holding Corp. (NASDAQOTH: ZINCQ  ) fell as much as 10% today after updating its plant progress.

So what: On Friday, after the market closed, management announced that a new zinc plant in Mooresboro, North Carolina is about $40 million over budget and behind schedule. Planned EBITDA of $90 million to $110 million is unchanged, and production is expected this year -- but the delay is certainly bad news for investors.  

Now what: With the increased costs, management is at least a little jittery about the company's financial position. They are "exploring additional sources of capital", which also means that a dilutive offering is on the table some time in the future. I don't think this is an opportunity to buy today, and would keep an eye on liquidity and construction progress in the future, as further delays change the company's value proposition.

Interested in more info on Horsehead Holding? Add it to your watchlist by clicking here.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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Related Tickers

5/24/2016 3:56 PM
ZINCQ $0.23 Up +0.01 +2.22%
Horsehead Holding CAPS Rating: ****