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Bear of the Day

Weak results have led to sharp downward estimates revisions, sending Advanced Emissions Solutions (ADES - Snapshot Report) to a Zacks Rank # 5 (Strong Sell).  
About the Company
 
Headquartered in Colorado, ADES develops, offers, and implements proprietary environmental technologies and provides equipment and specialty chemicals that enable coal-fueled power plants to meet emissions regulations.  It operates in three principal business segments: Refined Coal, Emissions Control and CO2 capture.

Disappointing Results
 
ADES reported its second quarter FY 2013 results on August 7, 2013. The quarter resulted in a net loss of $3.2 million or $0.32 per share compared to a net loss of $1.3 million or $0.13 per share for 2012. The results were substantially worse than the Zacks Consensus Estimate for earnings of $0.14 per share.
 
The Management said that while they were pleased with the continued success in Emission Control business, they were disappointed by the delays in the Refined Coal business that saw the closing of the lease contracts for two of their facilities slip into the third quarter of 2013.  
 
Downwards Revisions
 
Due to disappointing results and uninspiring guidance, quarterly and annual estimates have been revised sharply downwards in the past few weeks. Zacks consensus estimates for the current quarter and year are now in the negative territory—($0.11) and ($0.26) per share respectively, down substantially from $0.58 and $1.65 per share, 60 days ago.
 
The company has missed estimates in each of the past four quarters, with an average negative surprise of 548.72%.
 
The Bottom Line
 
While the Emission Control business continues to do well, delays in Refined Coal business continue to impact the results in the short term.
 
ADES is currently Zacks Rank # 5 (Strong Sell) stock and it has a longer-term recommendation of “Underperform”.  Further, Zacks Industry Rank of 218 out of 265 also indicated weakness in the short- to mid- term. As such investors would like to avoid this stock for the time being.
 
Better Play?
 
Investors seeking exposure to the Pollution Control industry could look at Progressive Waste Solutions (BIN), which is a Zacks Rank#1 (Strong Buy) stock.

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