Covanta (NYSE: CVA) is one of 20 publicly-traded companies in the “Waste Management, Disposal & Recycling Services” industry, but how does it contrast to its peers? We will compare Covanta to similar businesses based on the strength of its earnings, valuation, profitability, dividends, institutional ownership, analyst recommendations and risk.

Valuation & Earnings

This table compares Covanta and its peers gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Covanta $1.70 billion -$4.00 million -29.70
Covanta Competitors $850.65 million $28.19 million 148.91

Covanta has higher revenue, but lower earnings than its peers. Covanta is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Covanta pays an annual dividend of $1.00 per share and has a dividend yield of 6.7%. Covanta pays out -200.0% of its earnings in the form of a dividend. As a group, “Waste Management, Disposal & Recycling Services” companies pay a dividend yield of 1.9% and pay out 98.2% of their earnings in the form of a dividend. Covanta is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

94.8% of Covanta shares are held by institutional investors. Comparatively, 52.9% of shares of all “Waste Management, Disposal & Recycling Services” companies are held by institutional investors. 11.6% of Covanta shares are held by insiders. Comparatively, 12.3% of shares of all “Waste Management, Disposal & Recycling Services” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

This table compares Covanta and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Covanta -3.68% -12.66% -1.11%
Covanta Competitors -280.96% -68.14% -14.45%

Risk and Volatility

Covanta has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, Covanta’s peers have a beta of 0.62, suggesting that their average share price is 38% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Covanta and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covanta 1 0 6 0 2.71
Covanta Competitors 46 280 587 14 2.61

Covanta currently has a consensus price target of $17.79, suggesting a potential upside of 19.77%. As a group, “Waste Management, Disposal & Recycling Services” companies have a potential upside of 10.11%. Given Covanta’s stronger consensus rating and higher possible upside, analysts clearly believe Covanta is more favorable than its peers.

Summary

Covanta beats its peers on 11 of the 14 factors compared.

Covanta Company Profile

Covanta Holding Corporation is a holding company. The Company, through its subsidiaries, owns and operates infrastructure for the conversion of waste to energy, as well as other waste disposal and renewable energy production businesses. The Company operates through North America segment, which consists of waste and energy services operations located primarily in the United States and Canada. Outside of North America, the Company is constructing an energy-from-waste (EfW) facility in Dublin, Ireland. The Company holds interests in an EfW facility in Italy and an infrastructure business in China, which is engaged in EfW operations. These EfW projects generate revenue from three main sources: fees charged for operating projects or processing waste received; the sale of electricity and/or steam, and the sale of ferrous and non-ferrous metals that are recovered from the waste stream as part of the EfW process.

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