Harsco Seeing A 1-2 Punch Of Softening Steel Volumes And Weak Waste Treatment Margins

Very little has gone right for Harsco (NYSE:HSC) in 2022, as the company’s steel services business has seen weakening volumes and the Clean Earth waste treatment business has crumpled under the weight of cost inflation (also an issue in the steel services business). On top of that, there’s little visibility at this point on the sale of the Rail Services business, which management has been treating as a discontinued operation.

I was concerned about the possibility of further margin struggles at Clean Earth back in March, and the shares have lost about half their value since then. There aren’t really any comps for the company, but I would note that Alcoa (AA) and U.S. Steel (X) have seen similar declines over that period, and the waste management space hasn’t been especially strong either.

At this point, I’m torn between a difficult outlook for the steel industry, a more challenged outlook for the economy in general, the company’s self-help initiatives, and the valuation. The shares do appear undervalued on what I think are conservative expectations, but it’s hard to have much confidence in a bullish call here.

 

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Harsco Seeing A 1-2 Punch Of Softening Steel Volumes And Weak Waste Treatment Margins