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 waste-to-energy company Covanta (CVA) fell 12.4% today after the company reported earnings.
So what: Third quarter revenue rose 3.6% to $427 million, and net income from continuing operations rose slightly to $28 million, or $0.28 per share. Revenue was in-line with estimates and earnings were ahead of estimates, but outlook is what's in focus today.
Full-year earnings guidance was lowered to $0.33-$0.43 per share from a previous range of $0.40-$0.50 per share and below estimates of $0.44.
Now what: Management says that unscheduled outages, lower than expected steam demand, and slower organic growth have resulted in the lower guidance. But keep in mind that the company begins a contract in New York in 2015, something management is already preparing for. The rest of this year and 2014 will be a challenge, but the long-term thesis is intact and Covanta has the opportunity to be a great buy if it can execute its strategy into 2015.
