Tuesday, August 08, 2017

Tetra Tech's Two-Penny Disappointment

Tetra Tech’s (TTEK:  NASDAQ) quarter earnings report last week was met with high drama as traders reacted with surprisingly vehement disappointment over the recent financial performance of the engineering and technology business.   The company’s stock price gapped down in the first day of trading following the announcement, falling through a significant line of price support.   The shares continued to fall and finished the week at a price not seen since mid-April 2017 before the stock began its recent drive higher. 
Tetra Tech Coastal and Marine Resources Management 
The drama unfolded after Tetra Tech reported net earnings of $0.52 per share on $498 million in total sales in the quarter ending June 2017.  This compares to the consensus estimate of $0.54 EPS and $535.2 million in sales.  The two penny ‘miss’ was apparently seen as egregious despite the fact that reported results represented solid year-over-year growth rates in the high teens.

Friday, August 04, 2017

Redemption for Energy Recovery?

Despite reporting the highest gross profit margin in Energy Recovery’s history, investors were sorely disappointed with financial results in the Company’s second quarter ending June 2017.  On the first day of trading following the earnings release the share price gapped downward and closed even lower under above average trading volume.  This is likely because there was some expectation that Energy Recovery could finally report a net profit in the quarter as sales of the Company’s flagship PX Pressure Exchanger to the desalination market had appeared to pick up in recent months.  Unfortunately the Company reported a net loss of $500,000 or $0.01 per share on $12.2 million in total sales.

Tuesday, August 01, 2017

Good Business in the Environment

Florida Everglades
Humans are a filthy lot, and apparently unwilling to change their ways even in the face of irrefutable evidence that fouling your own nest can put survival in doubt.  That makes for good business for companies like Ecology & Environment, Inc. (EEI:  Nasdaq).  The company provides consulting services to industry on hazardous waste threats such as contamination by petroleum products used in manufacturing or chemicals required for weapons production.   Its portfolio of projects is filled with a variety of projects, ranging from ecosystem restoration in the Florida Everglades to zoning regulations for oil and gas development in Kern Country, California.
It is not a company that appears on lists of hot stocks compiled by analysts or reporters.  E&E keeps low profile as a problem solver for their clients.  However, with a foothold in a growing market and a small dividend as icing on the cake, the company merits consideration.

Friday, July 28, 2017

Cutting Out the Middleman in Waste-to-Energy

The recent articles, “Advanced Disposal Services:  Hauling a Heavy Load” and “Solid Play in Solid Waste” looked at waste management services.  The group has exploited increased demand and market fragmentation to deliver strong profits and growth.  Investors have flocked to the sector, inspired by one acquisition announcement after another. There may be more afoot in the sector than consolidation. 
There are some newcomers to the solid waste management sector that have passed up the usual business model of garbage trucks, transfer stations and landfills. These innovators are rethinking solid waste and bringing new technologies to the sector, potentially disrupting the business model that has been so effective for the garbage haulers.
In the last article we looked Recology with its alternative view on waste as valuable resource.  HomeBiogas Ltd. is yet another innovator with an entirely different approach to solid waste.