Shareholders might have noticed that Covanta Holding Corporation (NYSE:CVA) filed its annual result this time last week. The early response was not positive, with shares down 6.6% to US$14.28 in the past week. Revenues of US$1.9b arrived in line with expectations, although statutory losses per share were US$0.21, an impressive 24% smaller than what broker models predicted. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Covanta Holding's six analysts is for revenues of US$1.96b in 2021, which would reflect a modest 3.1% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Covanta Holding forecast to report a statutory profit of US$0.049 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.96b and earnings per share (EPS) of US$0.049 in 2021. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.
There were no changes to revenue or earnings estimates or the price target of US$14.58, suggesting that the company has met expectations in its recent result. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Covanta Holding at US$17.00 per share, while the most bearish prices it at US$10.50. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of Covanta Holding'shistorical trends, as next year's 3.1% revenue growth is roughly in line with 3.2% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 6.7% per year. So although Covanta Holding is expected to maintain its revenue growth rate, it's forecast to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Covanta Holding's revenues are expected to perform worse than the wider industry. The consensus price target held steady at US$14.58, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Covanta Holding going out to 2025, and you can see them free on our platform here.
You still need to take note of risks, for example - Covanta Holding has 2 warning signs we think you should be aware of.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
