Usually, scarcity means value in the equity markets. Unfortunately, anything relating to the nuclear power sector in the U.S. is colored with risk and uncertainty, and small engineering services firm EnergySolutions (NYSE:ES) has had trouble leveraging its expertise and assets in nuclear decommissioning. Although budgets and schedules are likely to remain uncertain for the foreseeable future, it would seem that the valuation on this stock has factored in quite a lot of bad news already.
Ahead of Schedule and Under Budget
The biggest project at present for EnergySolutions is the decommissioning of Exelon's (NYSE:EXC) Zion plant. Although there were fears that the early margins on this project would be weak, overall results have not been bad at all so far. More to the point, as of early 2012, it looks like this project is on target or better, and the company is working to renegotiate a cumbersome letter of credit. (For related reading, see Analyzing Operating Margins.)
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