Covanta Holding Corporation (NYSE: CVA) and Casella Waste Systems (NASDAQ:CWST) are both small-cap oils/energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Risk & Volatility

Covanta Holding Corporation has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, Casella Waste Systems has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.

Institutional & Insider Ownership

90.9% of Covanta Holding Corporation shares are held by institutional investors. Comparatively, 76.3% of Casella Waste Systems shares are held by institutional investors. 11.6% of Covanta Holding Corporation shares are held by company insiders. Comparatively, 11.5% of Casella Waste Systems shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Covanta Holding Corporation and Casella Waste Systems, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covanta Holding Corporation 1 1 6 0 2.63
Casella Waste Systems 0 2 3 0 2.60

Covanta Holding Corporation currently has a consensus price target of $17.19, indicating a potential upside of 25.46%. Casella Waste Systems has a consensus price target of $16.60, indicating a potential upside of 2.03%. Given Covanta Holding Corporation’s stronger consensus rating and higher probable upside, research analysts plainly believe Covanta Holding Corporation is more favorable than Casella Waste Systems.

Dividends

Covanta Holding Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 7.3%. Casella Waste Systems does not pay a dividend. Covanta Holding Corporation pays out -526.3% of its earnings in the form of a dividend.

Earnings & Valuation

This table compares Covanta Holding Corporation and Casella Waste Systems’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Covanta Holding Corporation $1.71 billion 1.04 $296.00 million ($0.19) -72.10
Casella Waste Systems $582.75 million 1.17 $112.99 million ($1.40) -11.62

Covanta Holding Corporation has higher revenue and earnings than Casella Waste Systems. Covanta Holding Corporation is trading at a lower price-to-earnings ratio than Casella Waste Systems, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Covanta Holding Corporation and Casella Waste Systems’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Covanta Holding Corporation -1.41% -9.81% -0.96%
Casella Waste Systems -10.01% -60.26% 3.31%

Summary

Covanta Holding Corporation beats Casella Waste Systems on 13 of the 15 factors compared between the two stocks.

About Covanta Holding Corporation

Covanta Holding Corporation is a holding company. The Company, through its subsidiaries, owns and operates infrastructure for the conversion of waste to energy, as well as other waste disposal and renewable energy production businesses. The Company operates through North America segment, which consists of waste and energy services operations located primarily in the United States and Canada. Outside of North America, the Company is constructing an energy-from-waste (EfW) facility in Dublin, Ireland. The Company holds interests in an EfW facility in Italy and an infrastructure business in China, which is engaged in EfW operations. These EfW projects generate revenue from three main sources: fees charged for operating projects or processing waste received; the sale of electricity and/or steam, and the sale of ferrous and non-ferrous metals that are recovered from the waste stream as part of the EfW process.

About Casella Waste Systems

Casella Waste Systems, Inc. is a solid waste services company. The Company provides resource management services to residential, commercial, municipal and industrial customers, primarily in the areas of solid waste collection and disposal, transfer, recycling and organics services. It manages its solid waste operations on a geographic basis through two regional operating segments: Eastern and Western regions, each of which provides a range of solid waste services, and its recycling and commodity brokerage operations through its Recycling segment. Organics services, ancillary operations and industrial services are included in its Other segment. As of January 31, 2017, the Company owned and/or operated 32 solid waste collection operations, 46 transfer stations, 18 recycling facilities, nine Subtitle D landfills, four landfill gas-to-energy facilities and one landfill permitted to accept construction and demolition (C&D) materials.

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