What happened

Shares of Covanta Holding (NYSE:CVA), a leading waste-to-energy and environmental solutions company, are up 14% today, as of 2:50 p.m. EST. The jump comes one trading day after another double-digit increase on Friday. 

The company reported a profitable third quarter last week, and followed that up with a release announcing a new CEO and plans for a strategic review "to unlock shareholder value." 

So what

The company reported a return to profitability in its third quarter for the first time in 2020. Covanta reported improvements in business conditions that have been impacted by the COVID-19 pandemic, but investors today are digesting the details of the new direction the company outlined in its earnings call.

white arrow with old way facing left, yellow arrow with new way facing right.

Image source: Getty Images.

Covanta's chairman of the board Sam Zell told investors on Friday that Mike Ranger would be replacing Stephen Jones as president and CEO of the company. He said that Ranger would be working to unlock the value in the company that has not been reflected in the share price. 

Now what

Zell's comments come after shares haven't recovered from 2020 losses that still have the stock down almost 35% year to date. He said Ranger would be responsible for a review that has everything on the table, "including our assets and operations, growth priorities and capital structure."

Covanta's waste-to-energy business reduces greenhouse gas emissions as the incinerated waste is kept from producing methane in landfills. It also generates enough electricity to continuously power 1 million homes, and recycles 550,000 tons of metal per year from its waste streams.

While investors are anticipating good things from the changes announced, the company has a net debt of over $2.5 billion. The results of any strategic alternatives will need to address the balance sheet for the stock to continue upward in the long run.

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