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Why Is Covanta (CVA) Up 0.3% Since Last Earnings Report?

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It has been about a month since the last earnings report for Covanta . Shares have added about 0.3% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Covanta due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Covanta Holding Posts Loss in Q2 But Beats on Revenues

Covanta Holding incurred a loss of 14 cents per share for second-quarter 2021, wider than the Zacks Consensus Estimate of a loss of 3 cents as well as the year-ago quarter’s loss of 10 cents.


In the quarter under review, revenues amounted to $506 million, beating the Zacks Consensus Estimate of $496 million by 2%. The top line also improved 11.5% year over year, primarily owing to higher waste and service, energy and materials sales revenues.

Highlights of the Release

In the second quarter, the company’s adjusted EBITDA came in at $110 million, up 14.6% from $96 million in the prior-year quarter.

In the reported quarter, Covanta Holding’s total operating expenses summed $481 million, up 10.3% year over year.

Interest expenses were $32 million, down 5.9% from the prior-year quarter’s reading.

Financial Condition

Covanta Holding had cash and cash equivalents of $54 million as of Jun 30, 2021 compared with $55 million as of Dec 31, 2020.

Long-term debt was $2,375 million as of Jun 30, 2021 compared with $2,396 million as of Dec 31, 2020.

Net cash provided by operating activities in the first six months of 2021 was $157 million, higher than $155 million in the comparable period of last year.

Deal Update

In July 2021, Covanta Holding inked a deal to sell all its shares to EQT Infrastructure for $5.3 billion including the net debt obligations. The transaction is contingent on the company’s shareholders’ and customary government approvals, and is likely to be complete in the fourth quarter of the ongoing year. Keeping this in view, the company did not provide any guidance for the current year.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, Covanta has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.


Estimates have been trending upward for the stock, and the magnitude of this revision has been net zero. Notably, Covanta has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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