Q3 Earnings Preview for Harsco (NYSE:HSC)

in EARNINGS/INVESTING IDEAS by

Harsco Corporation (NYSE:HSC) is scheduled to report Q3 earnings results before markets open for trading on November 3, 2020.

The company is expected to report earnings of $0.05/share on revenue of $480.4 million. The consensus earnings per share (EPS) of $0.05/share is based on a poll of 6 analysts and represents a decline in eps of −83.9% over the same quarter last year, when the company reported earnings of $0.30/share.

The revenue forecast of $480.4 million based on a poll of 6 analysts implies a year-over-year (YoY) growth in revenue of 13.5%. Last year the company reported $423.2 million in revenue for the quarter.

Expected to report EPS contraction of −83.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $480.40 $423.15 13.5%
EPS $0.05 $0.30 −83.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 5 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 2 quarters.

What are your expectations from Harsco Corporation for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.04 $0.13 439.2% Beat
Q1, 2020 $0.02 $0.16 788.9% Beat
Q4, 2019 $0.12 $0.12 0.0% Met
Q3, 2019 $0.37 $0.30 −18.2% Missed
Q2, 2019 $0.37 $0.37 0.0% Met
Q1, 2019 $0.23 $0.29 27.9% Beat
Q4, 2018 $0.29 $0.33 13.8% Beat
Q3, 2018 $0.36 $0.40 10.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −8.7%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $16.60 $15.15 −8.7% Decline
May 8, 2020 $8.10 $9.95 22.8% Increase
February 21, 2020 $15.48 $15.10 −2.5% Decline
October 29, 2019 $20.58 $20.59 0.0% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.04, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.04 implies a 2.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Harsco Corporation is currently trading at $13.76/share, down −5.8% for the day. The company is trading at approximately 58.7% of its 52-week high of $23.61/share. The company’s stock price is down −9.2% since the last earnings report and down −9.9% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 48.96 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HSC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 1,005.89 and a forward P/E multiple of 60.43.

Harsco Corporation’s current share price also implies a price-to-book (P/B) multiple of 1.51. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $13.76
P/E Ratio 1,005.9x
P/E Ratio (Fwd) 60.4x
PEG Ratio 3.0
Total Debt / Total Capital 53.0%
Levered Free Cash Flow -$129 million
EV / EBITDA 9.3x

Finbox

Harsco Corporation is a small-cap stock with a market capitalization of $1.153 billion and a total enterprise value of $2.476 billion. The company operates in the Industrials sector and the Commercial Services & Supplies industry.

Harsco Corporation provides environmental solutions for industrial and specialty waste streams, and innovative equipment and technology for the rail sector worldwide. It operates through three segments: Harsco Environmental, Harsco Clean Earth, and Harsco Rail. The Harsco Environmental segment offers on-site services of material logistics, product quality improvement, and resource recovery for iron, steel, and metals manufacturing; manufactures and sells industrial abrasives, roofing granules, aluminum dross, and scrap processing systems; and produces value-added downstream products from industrial waste-stream. The Harsco Clean Earth segment provides specialty waste processing and beneficial reuse solutions for hazardous wastes, contaminated materials, and dredged volumes. The Harsco Rail segment offers equipment, after-market parts, and services for the maintenance, repair, and construction of railway track. This segment manufactures and sells highly-engineered railway track maintenance equipment, and collision avoidance and warning systems to support passenger, rail worker, and pedestrian safety, as well as measurement and diagnostic technologies that support railway maintenance programs. The company was founded in 1853 and is headquartered in Camp Hill, Pennsylvania.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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