NYSE:CVA

Stock Analysis Report

Executive Summary

Covanta Holding Corporation, through its subsidiaries, provides waste and energy services to municipal entities primarily in the United States and Canada.

Rewards

Trading at 23.9% below its fair value

Risk Analysis

Earnings are forecast to decline by an average of -68.8% per year for the next 3 years

Interest payments are not well covered by earnings

Dividend of 6.6% is not well covered by earnings or forecast to be in the next 3 years

Large one-off items impacting financial results

+ 1 more risk


Snowflake Analysis

Slightly overvalued unattractive dividend payer.


Similar Companies

Share Price & News

How has Covanta Holding's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: CVA has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

3.7%

CVA

2.8%

US Commercial Services

1.7%

US Market


1 Year Return

-0.7%

CVA

23.1%

US Commercial Services

23.2%

US Market

Return vs Industry: CVA underperformed the US Commercial Services industry which returned 23.7% over the past year.

Return vs Market: CVA underperformed the US Market which returned 24.7% over the past year.


Shareholder returns

CVAIndustryMarket
7 Day3.7%2.8%1.7%
30 Day4.5%4.2%4.2%
90 Day-7.0%4.9%11.9%
1 Year5.4%-0.7%27.7%23.1%25.8%23.2%
3 Year18.8%-2.0%66.8%55.8%52.8%42.9%
5 Year-0.3%-26.7%108.6%87.4%75.2%55.8%

Price Volatility Vs. Market

How volatile is Covanta Holding's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Covanta Holding undervalued compared to its fair value and its price relative to the market?

25.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CVA ($15.16) is trading below our estimate of fair value ($19.91)

Significantly Below Fair Value: CVA is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: CVA is poor value based on its PE Ratio (283.2x) compared to the Commercial Services industry average (26.4x).

PE vs Market: CVA is poor value based on its PE Ratio (283.2x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: CVA's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: CVA is overvalued based on its PB Ratio (5.2x) compared to the US Commercial Services industry average (2.1x).


Next Steps

Future Growth

How is Covanta Holding forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

-68.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CVA's earnings are forecast to decline over the next 3 years (-68.8% per year).

Earnings vs Market: CVA's earnings are forecast to decline over the next 3 years (-68.8% per year).

High Growth Earnings: CVA's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CVA's revenue (3.1% per year) is forecast to grow slower than the US market (7.5% per year).

High Growth Revenue: CVA's revenue (3.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if CVA's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Covanta Holding performed over the past 5 years?

28.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CVA has a large one-off gain of $56.0M impacting its September 30 2019 financial results.

Growing Profit Margin: CVA's current net profit margins (0.4%) are lower than last year (14.7%).


Past Earnings Growth Analysis

Earnings Trend: CVA's earnings have grown significantly by 28.9% per year over the past 5 years.

Accelerating Growth: CVA's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: CVA had negative earnings growth (-97.4%) over the past year, making it difficult to compare to the Commercial Services industry average (-1.3%).


Return on Equity

High ROE: CVA's Return on Equity (1.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Covanta Holding's financial position?


Financial Position Analysis

Short Term Liabilities: CVA's short term assets ($475.0M) exceed its short term liabilities ($339.0M).

Long Term Liabilities: CVA's short term assets ($475.0M) do not cover its long term liabilities ($3.1B).


Debt to Equity History and Analysis

Debt Level: CVA's debt to equity ratio (667.9%) is considered high.

Reducing Debt: CVA's debt to equity ratio has increased from 274.5% to 667.9% over the past 5 years.

Debt Coverage: CVA's debt is not well covered by operating cash flow (8.1%).

Interest Coverage: CVA's interest payments on its debt are not well covered by EBIT (0.6x coverage).


Balance Sheet

Inventory Level: CVA has a high level of physical assets or inventory.

Debt Coverage by Assets: CVA's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

What is Covanta Holding's current dividend yield, its reliability and sustainability?

6.42%

Current Dividend Yield


Dividend Yield vs Market

company6.4%marketbottom25%1.4%markettop25%3.6%industryaverage1.5%forecastin3Years6.4%

Current dividend yield vs market & industry

Notable Dividend: CVA's dividend (6.6%) is higher than the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: CVA's dividend (6.6%) is in the top 25% of dividend payers in the US market (3.66%)


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, CVA has been paying a dividend for less than 10 years.

Growing Dividend: CVA's dividend payments have increased, but the company has only paid a dividend for 9 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (1867.9%), CVA's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CVA is forecast to pay a dividend in 3 years whilst incurring a loss, therefore the dividend is not forecast to be well covered.


Next Steps

Management

What is the CEO of Covanta Holding's salary, the management and board of directors tenure and is there insider trading?

5.0yrs

Average management tenure


CEO

Steve Jones (58yo)

4.8yrs

Tenure

US$4,639,255

Compensation

Mr. Stephen J. Jones, also known as Steve, has been the Chief Executive Officer and President of Covanta Holding Corporation since January 2015. Mr. Jones has been an Independent Director of Tronox Holding ...


CEO Compensation Analysis

Compensation vs Market: Steve's total compensation ($USD4.64M) is about average for companies of similar size in the US market ($USD3.86M).

Compensation vs Earnings: Steve's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.0yrs

Average Tenure

53.5yo

Average Age

Experienced Management: CVA's management team is seasoned and experienced (5 years average tenure).


Board Age and Tenure

14.3yrs

Average Tenure

64.5yo

Average Age

Experienced Board: CVA's board of directors are seasoned and experienced ( 14.3 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$205,65606 Sep 19
Linda Fisher
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares12,000
Max PriceUS$17.14
SellUS$170,82901 Aug 19
Michael de Castro
EntityIndividual
Role
Senior Key Executive
Executive Vice President of Supply Chain
Shares10,000
Max PriceUS$17.08
SellUS$51,69001 Aug 19
Paul Stauder
EntityIndividual
Shares2,996
Max PriceUS$17.25
SellUS$115,21120 May 19
Ronald Broglio
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares6,500
Max PriceUS$17.72
SellUS$784,54616 May 19
Timothy Simpson
EntityIndividual
Role
Chief Legal Officer
Executive VP
Shares44,116
Max PriceUS$17.82

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Timothy Simpson (60yo)

    Executive VP

    • Tenure: 15.3yrs
    • Compensation: US$1.54m
  • Steve Jones (58yo)

    President

    • Tenure: 4.8yrs
    • Compensation: US$4.64m
  • Michael de Castro (56yo)

    Executive Vice President of Supply Chain

    • Tenure: 4.5yrs
    • Compensation: US$1.55m
  • Dan Mannes

    Vice President of Investor Relations

    • Brad Helgeson (42yo)

      Executive VP & CFO

      • Tenure: 6.2yrs
      • Compensation: US$2.14m
    • Paul Gilman

      Senior VP & Chief Sustainability Officer

      • Tenure: 12yrs
    • Matthew Mulcahy (55yo)

      Executive VP & Head of Corporate Development

      • Tenure: 7.8yrs
      • Compensation: US$1.21m
    • Derek Veenhof (52yo)

      Executive Vice President of Asset Management

      • Tenure: 5yrs
      • Compensation: US$1.94m
    • Manpreet Grewal (40yo)

      VP & Chief Accounting Officer

      • Tenure: 2.8yrs
    • Ginny Angilello (49yo)

      Senior VP & Chief Human Resources Officer

      • Tenure: 1.8yrs

    Board Members

    • David Barse (56yo)

      Independent Director

      • Tenure: 23.7yrs
      • Compensation: US$180.02k
    • Peter C. Bynoe (69yo)

      Independent Director

      • Tenure: 15.5yrs
      • Compensation: US$170.03k
    • Rob Silberman (61yo)

      Lead Director

      • Compensation: US$180.00k
    • Jean Smith (63yo)

      Independent Director

      • Tenure: 16.1yrs
      • Compensation: US$180.02k
    • Sam Zell (77yo)

      Chairman of the Board

      • Tenure: 14.3yrs
      • Compensation: US$600.04k
    • Mike Ranger (61yo)

      Independent Director

      • Tenure: 3.3yrs
      • Compensation: US$185.02k
    • Joe Holsten (67yo)

      Independent Director

      • Tenure: 10.7yrs
      • Compensation: US$180.02k
    • Linda Fisher (66yo)

      Independent Director

      • Tenure: 12.1yrs
      • Compensation: US$170.00k
    • Ronald Broglio (78yo)

      Independent Director

      • Tenure: 15.3yrs
      • Compensation: US$170.00k
    • Steve Jones (58yo)

      President

      • Tenure: 4.8yrs
      • Compensation: US$4.64m

    Company Information

    Covanta Holding Corporation's company bio, employee growth, exchange listings and data sources


    Key Information

    • Name: Covanta Holding Corporation
    • Ticker: CVA
    • Exchange: NYSE
    • Founded: 1960
    • Industry: Environmental and Facilities Services
    • Sector: Commercial Services
    • Market Cap: US$2.032b
    • Shares outstanding: 130.71m
    • Website: https://www.covanta.com

    Number of Employees


    Location

    • Covanta Holding Corporation
    • 445 South Street
    • Morristown
    • New Jersey
    • 7960
    • United States

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    CVANYSE (New York Stock Exchange)YesCommon StockUSUSDDec 1990
    C3KDB (Deutsche Boerse AG)YesCommon StockDEEURDec 1990

    Biography

    Covanta Holding Corporation, through its subsidiaries, provides waste and energy services to municipal entities primarily in the United States and Canada. It owns and operates infrastructure for the conversion of waste to energy, as well as engages in related waste transport and disposal, and other renewable energy production businesses. The company disposes waste and generates electricity and/or steam; sells metal recovered during the energy-from-waste (EfW) process; and offers waste management solutions, such as site clean-up, wastewater treatment, pharmaceutical and healthcare solutions, transportation and logistics, recycling, and depackaging. It owns and operates 44 EfW facilities; 16 waste transfer stations, 20 material processing facilities, 4 landfills, and 1 regional metals recycling facility. Covanta Holding Corporation has a strategic partnership with the Green Investment Group Limited to develop, fund, and own EfW projects in Ireland and the United Kingdom. The company was formerly known as Danielson Holding Corporation and changed its name to Covanta Holding Corporation in September 2005. Covanta Holding Corporation was founded in 1960 and is headquartered in Morristown, New Jersey. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/17 23:50
    End of Day Share Price2020/01/17 00:00
    Earnings2019/09/30
    Annual Earnings2018/12/31


    Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.