Covanta Holding Corporation (NYSE: CVA) and US Ecology (NASDAQ:ECOL) are both small-cap oils/energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, earnings, valuation, risk, profitabiliy, institutional ownership and analyst recommendations.

Institutional & Insider Ownership

90.0% of Covanta Holding Corporation shares are held by institutional investors. Comparatively, 85.5% of US Ecology shares are held by institutional investors. 11.6% of Covanta Holding Corporation shares are held by insiders. Comparatively, 1.3% of US Ecology shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Covanta Holding Corporation and US Ecology’s 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%
US Ecology 5.86% 11.37% 4.11%

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Covanta Holding Corporation and US Ecology, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Covanta Holding Corporation 1 1 6 0 2.63
US Ecology 1 1 2 0 2.25

Covanta Holding Corporation presently has a consensus price target of $17.19, suggesting a potential upside of 19.36%. US Ecology has a consensus price target of $53.75, suggesting a potential upside of 7.39%. Given Covanta Holding Corporation’s stronger consensus rating and higher probable upside, research analysts plainly believe Covanta Holding Corporation is more favorable than US Ecology.

Earnings and Valuation

This table compares Covanta Holding Corporation and US Ecology’s 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 1.09 $296.00 million ($0.19) -75.79
US Ecology $478.29 million 2.28 $106.70 million $1.28 39.10

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

Dividends

Covanta Holding Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 6.9%. US Ecology pays an annual dividend of $0.72 per share and has a dividend yield of 1.4%. Covanta Holding Corporation pays out -526.3% of its earnings in the form of a dividend. US Ecology pays out 56.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Covanta Holding Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Covanta Holding Corporation has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, US Ecology has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Summary

Covanta Holding Corporation beats US Ecology on 10 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 US Ecology

US Ecology, Inc. is a provider of environmental services to commercial and government entities. The Company offers treatment, disposal and recycling of hazardous, non-hazardous and radioactive waste, as well as a range of field and industrial services. The Company operates in two business segments: Environmental Services, and Field & Industrial Services. Its Environmental Services segment provides a range of hazardous material management services, including transportation, recycling, treatment and disposal of hazardous and non-hazardous waste at Company-owned landfill, wastewater and other treatment facilities. The Company’s Field & Industrial Services segment provides packaging and collection of hazardous waste and total waste management solutions at customer sites and through its transfer facilities. Its services include on-site management, waste characterization, transportation and disposal of non-hazardous and hazardous waste.

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