Harsco Executing Very Well Amid Healthy Market Trends

Looking into 2019, it’s hard not to like where Harsco (HSC) is sitting. Although steel stocks have sold off on worries that prices and spreads are past the peak, volume and capacity utilization continues to rise, and companies aren’t talking about cutting back on production yet; in fact, there are capacity expansion plans on the books. What’s more, railroads are back to getting back to their maintenance spending, and the current demand/price environment for natural gas suggests a healthy outlook for heat exchangers used to process gas for transport. As far as looming negatives go, nickel prices are a concern, but that’s about the only issue I see right now.

Harsco shares have corrected pretty sharply from their recent November highs, and I think the ongoing weakness in nickel prices (and worries about the steel sector in general) may be why. Although the stock doesn’t look particularly cheap on cash flow, the EV/EBITDA valuation is a little more interesting and management’s apparent intention to shift towards more environmental mitigation in the metals business could drive better sustained margins in the future.

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Harsco Executing Very Well Amid Healthy Market Trends