Apr 09 2011
Financial Analysis of Covanta Holdings Corp
Covanta Holdings Corporation has seen an increase in revenues within the last year. The company has always been financially sound. It struggled, as all companies did within the waste management services industry did after the recession crisis in 2008. The company has steadily been increasing revenue since then as people are once again increasing their purchases and therefore increases waste.
Covanta’s profit margin however has slowly been decreasing. This is due to a decrease in their net income, or earnings. The company has been spending their money on acquisitions in Asia as well as expanding their services in the United States. The company is spending money on finding new ways to create reusable energy from waste.
April 26th, 2011 at 5:52 pm
These are very detailed and informative posts. Covanta seems to be taking a different approach to the waste management industry. They seem to have a strong concern for protecting the earth’s natural resources as well as turning waste into energy.
In looking at the data without looking into the company’s mission and future plans I would not invest in Covanta, but because they are involved in a new and growing industry I believe that Covanta would be a smart investment. In the overcrowded and wasteful world that we live in today it has become necessary to effectively manage our waste. This is the goal of Covanta and they have excelled in doing so over the past five years. Despite decreases in profit margin and stock prices, their annual revenue has increased consistently over the past five years. This increase helps show growth in the company, which is what will make this investment successful. They are a company that is going to become necessary in the next few years and with experience in the past with renewing waste they will be able to excel in the future.
Covanta Energy is similar to my company, the Southern Company, in the sense that both are concerned for the environment. Covanta was built on the basis of creating energy from waste, but the Southern Company has recently made efforts to decrease their carbon footprint by developing alternative sources of energy. Society as a whole is moving towards a more environmentally friendly atmosphere and both Covanta and the Southern Company are following this trend in order to keep up with the consumers. In doing so I believe that these are both two strong investments due to their economic past and ability to connect with consumers.