Harsco (HSC) was already underway with an ambitious corporate transformation plan, selling off its hodgepodge of industrial businesses and investing in hazardous waste treatment in a big way, and then COVID-19 came along and threw a few extra handfuls of sand into the gears. Now Harsco is dealing with very weak steel plant utilization rates and an overall slowdown in activity that has hit hazardous waste volumes.
It’s challenging to model Harsco, as the waste handling business is still new and the significant piece acquired from Stericycle (SRCL) wasn’t performing at top form at the time of the deal. On top of that, a recovery in steel demand looks like a multiyear process and it’s unclear as to how companies will balance capacity/output and price. Those modeling issues increase the risk, but I believe Harsco shares should trade in the high teens, provided management can execute on the integration of ESOL into the Clean Earth business and the economy doesn’t see a significant stumble from here.
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Harsco Hammered By Weak Volumes, But This Transformation Is Worth Watching
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