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Calgon Carbon Poised on Strategic Actions Amid Headwinds
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On Jan 9, we issued an updated research report on pollution control company Calgon Carbon .
Calgon Carbon underperformed the Zacks categorized Pollution Control industry in the last three months, partly due to its lower-than-expected earnings performance in the last reported quarter. The company's shares gained 2.8% during the period while the industry saw a gain of around 12%.
While Calgon Carbon is seeing weakness in global industrial end markets, it should gain from its aggressive cost-reduction actions, capacity expansion and contract wins. The company continues to diversify and grow both through its product offerings and increased penetration into new and emerging end markets and geographies.
The company, in its third-quarter call, said that it remains focused on strategic measures such as cost reduction actions and executing on opportunities in other areas of its diverse end markets that are benefiting from favorable market dynamics. The company noted that it is gaining considerable traction in the municipal water market from its efforts to address the removal of harmful perfluorinated compounds that are being found in many drinking water sources across the U.S.
Calgon Carbon has embarked on aggressive cost reduction initiatives to boost margins. The company has announced an additional cost-improvement program that is expected to generate savings of more than $10 million, most of which are projected to be realized in 2017.
Moreover, the acquisition of the European Activated Carbon and Filter Aid Business from CECA is a strategic fit for Calgon Carbon. The integrated company is expected to be a leader in the activated carbon and filtration media market, with expanded diversification, a strong presence in Europe and an extended reach into emerging markets. The transaction is expected to be accretive to Calgon Carbon’s earnings per share in 2017 by 8 cents to 11 cents, barring purchase accounting adjustments. The company also expects the acquisition to add roughly $100 million to its sales in 2017.
However, Calgon Carbon continues to witness a challenging global economic environment, affecting sales in certain areas of its industrial end markets. Demand for activated carbon remains weak in specific markets. Market uncertainties are expected to sustain in the short haul. In its equipment business, the company continues to sees lower sales for ballast water treatment systems.
In addition, currency remains a headwind for the company. Unfavorable currency translation had a $0.5 million negative impact on its top line in third-quarter 2016. The company sees an unfavorable impact of $0.5 million to $1 million for the fourth quarter.
Calgon Carbon currently carries a Zacks Rank #3 (Hold).
Better-ranked companies in the pollution control space include CECO Environmental Corp. , Heritage-Crystal Clean, Inc and Donaldson Company, Inc. (DCI - Free Report) .
CECO, sporting a Zacks Rank #1 (Strong Buy), has an expected long-term growth of 15%.
Donaldson carries a Zacks Rank #2 (Buy) and has an expected long-term growth of 9.3%.
Zacks' Top 10 Stocks for 2017
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Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Calgon Carbon Poised on Strategic Actions Amid Headwinds
On Jan 9, we issued an updated research report on pollution control company Calgon Carbon .
Calgon Carbon underperformed the Zacks categorized Pollution Control industry in the last three months, partly due to its lower-than-expected earnings performance in the last reported quarter. The company's shares gained 2.8% during the period while the industry saw a gain of around 12%.
While Calgon Carbon is seeing weakness in global industrial end markets, it should gain from its aggressive cost-reduction actions, capacity expansion and contract wins. The company continues to diversify and grow both through its product offerings and increased penetration into new and emerging end markets and geographies.
The company, in its third-quarter call, said that it remains focused on strategic measures such as cost reduction actions and executing on opportunities in other areas of its diverse end markets that are benefiting from favorable market dynamics. The company noted that it is gaining considerable traction in the municipal water market from its efforts to address the removal of harmful perfluorinated compounds that are being found in many drinking water sources across the U.S.
Calgon Carbon has embarked on aggressive cost reduction initiatives to boost margins. The company has announced an additional cost-improvement program that is expected to generate savings of more than $10 million, most of which are projected to be realized in 2017.
Moreover, the acquisition of the European Activated Carbon and Filter Aid Business from CECA is a strategic fit for Calgon Carbon. The integrated company is expected to be a leader in the activated carbon and filtration media market, with expanded diversification, a strong presence in Europe and an extended reach into emerging markets. The transaction is expected to be accretive to Calgon Carbon’s earnings per share in 2017 by 8 cents to 11 cents, barring purchase accounting adjustments. The company also expects the acquisition to add roughly $100 million to its sales in 2017.
However, Calgon Carbon continues to witness a challenging global economic environment, affecting sales in certain areas of its industrial end markets. Demand for activated carbon remains weak in specific markets. Market uncertainties are expected to sustain in the short haul. In its equipment business, the company continues to sees lower sales for ballast water treatment systems.
In addition, currency remains a headwind for the company. Unfavorable currency translation had a $0.5 million negative impact on its top line in third-quarter 2016. The company sees an unfavorable impact of $0.5 million to $1 million for the fourth quarter.
Calgon Carbon currently carries a Zacks Rank #3 (Hold).
Calgon Carbon Corporation Price
Calgon Carbon Corporation Price | Calgon Carbon Corporation Quote
Stocks to Consider
Better-ranked companies in the pollution control space include CECO Environmental Corp. , Heritage-Crystal Clean, Inc and Donaldson Company, Inc. (DCI - Free Report) .
CECO, sporting a Zacks Rank #1 (Strong Buy), has an expected long-term growth of 15%.
Heritage-Crystal Clean, also a Zacks Rank #1 stock, has an expected long-term growth of 20%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Donaldson carries a Zacks Rank #2 (Buy) and has an expected long-term growth of 9.3%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>