Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
is a horde of barbarians gathering outside the walls of waste handler Casella Waste
Systems, Inc. (CWST:Nasdaq).Well, they are not exactly barbarians.Actually, it is a single activist investor.However, Casella’s board of directors might
feel as much threat as if they were in line of sight for the slings and arrows of
JCP Investment Management has proposed a slate of three nominees for Casella’s
board of directors.JCP charges Casella
with under performance and poor corporate performance.They apparently believe that some new blood in
the boardroom could bring a sharper focus to the Company’s strategic decision making.
has been struggling with its waste collection and transport business. It has dabbled in waste-to-energy with little success.In the year ending
December 31, 2014, the Company reported a net loss of $9.0 million on sales
totaling $552.6 million.The company has
an operating profit margin of 6.1%.Unfortunately, there are significant interest expenses running near $40
million per year on over $500 million in long-term debt.Stockholders are strapped a significant
deficit of $0.30 per share.
looks like analysts following the Company see some hope on the horizon.The consensus estimate for the current fiscal
year ending December 2015, is a loss but the year 2016 is breakeven.The thing is, the range of estimates for 2016
is so wide that it is apparent there is much to debate over Casella’s future.Earnings per share estimates for the year
2016, range from a loss of $0.17 per share to a profit of $0.29 per share.
the near-term though, everybody pretty much agrees the Company will not report
a profit.It is this dismal prognosis that
has JCP Investment up in arms and battling for as many as three seats at the
table.We will have to wait a while to
find out whether the rest of Casella’s shareholders are prepared to support
them.Casella has postponed indefinitely
its annual meeting previously scheduled for July 2015.In the filing with the SEC to delay the
meeting, Casella cited the timing of the last annual report in October
2014.Casella has a nine-member board of
directors with staggered three-year terms.
shareholder vote may have been delayed, but Casella management still has to
face investors at the next earnings call on May 7th.The Company is scheduled to release results
for the quarter ending March 2015, on Tuesday May 6th after the market
close.Management is giving investors
time to stew over results overnight and the stock will begin to trade before
they get on the phone with investors to answer questions about the quarter
is a clear consensus on the March 2015 quarter.There will be a loss.Yet there
is quite a range in viewpoint as to how deep that loss will be.The average of the six estimates that have
been submitted to Thomson Reuters is a loss of $0.19 per share on $118.7
million.However, the range of estimates
is wide, from a loss of just one penny to as much as $0.32 per share.The analysts seem to have quite a
disagreement on the level of sales, with the sales estimates ranging from
$110.4 million to $141.4 million.
discrepancies in estimates might be symptomatic of management’s inability to
explain its strategic vision to analysts. Then again, if JCP Investment is correct, the
problem is not investor relations.The
problem is that there is no strategic vision for Casella Waste Systems and that
is a weak position to be in when there are hostile forces at the gate.
Neither the author of the Small Cap
Strategist web log, Crystal Equity Research nor its affiliates have a
beneficial interest in the companies mentioned herein.