Newalta Corp: One to Watch this Reporting Season

Get set for this week’s release from this promising waste related firm.

The Motley Fool

Do you ever wonder where the old oil that’s drained from your car goes?  Well, especially if you live in Vancouver, Newalta has the answer.

This company can do things that no other company in the country can do and is poised for a great long-term run.

The waste management and recovery industry is an industry that should experience healthy growth in coming years due to the continuing growth in environmental standards.   This is an industry that is experiencing secular growth, and Newalta Inc. (TSX: NAL) has an estimated 35% market share in Canada.  (For more background on Newalta, check out our profile in a recent edition of Take Stock)

Upcoming quarter

Newalta will be reporting second quarter results on Wednesday.  The consensus earnings estimate for the quarter is $0.17 versus $0.10 in the same quarter last year.  This represents a 70% growth rate in EPS.

When the company released its first quarter results in May, they were disappointing, as they were negatively impacted by weak commodity prices and reduced drilling.  Revenue increased 2.9% while EBITDA declined 23% due to lower activity and higher SG&A expenses.

On the positive side, the company increased its dividend last quarter by 10% to $0.44 per share.  This leaves its current yield at 3.1% and demonstrates management’s confidence in future growth and stability. Furthermore, management has committed to focus on return on capital and their outlook was positive.

Newalta is trading at a price earnings ratio of 16 times 2013 consensus earnings, but only 13 times 2014 consensus estimates.  The stock is not currently placing much value on the company’s substantial future opportunities.


At the time of the first quarter release, management anticipated strong increases in year over year performance in the second half as the returns from recent capital investments begin to be realized.   With the difficult drilling environment we’ve had in the second quarter, this short term outlook may have been too optimistic.  However, this does not change the long term outlook.  There is good visibility on the company’s pipeline of organic growth capital projects, extending well into 2014 and capital spending will be prioritized towards longer term contracts that deliver the highest returns.

Like small caps?  The Motley Fool has just released its top Canadian small cap pick for 2013….and beyond.  Simply click here now to reveal the pick.  It’s FREE!

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.

Follow us on Twitter and Facebook for the latest in Foolish investing.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

More on Investing

online shopping

3 Reasons to Buy Shopify Stock Right Now

Let's dive into why Shopify (TSX:SHOP) looks like a strong buying opportunity at this point in the macroeconomic cycle.

Read more »

edit Sale sign, value, discount

3 Top Canadian Stocks Available at a Discount (for Now)

Given their long-term growth potential, these three Canadian stocks are excellent buys at these levels.

Read more »

A person builds a rock tower on a beach.
Stocks for Beginners

Here Is the Best Way to Start Investing With $1,000 Right Now

Let's get beyond the basics with these tips on how to turn your basic portfolio into booming with even just…

Read more »

Hand arranging wood block stacking as step stair with arrow up.

1 Ridiculously Undervalued Growth Stock Down 23% to Buy Hand Over Fist

OpenText (TSX:OTEX) stock could be one of the best buys out there, with the company down 23% in the last…

Read more »

Hands holding trophy cup on sky background
Dividend Stocks

3 of the Top Dividend Stocks in Canada

Top TSX dividend stocks are still on sale.

Read more »

Index funds

Got $500 to Invest in Stocks? Put it in This Index Fund

Here's why I like this index fund.

Read more »

A colourful firework display
Tech Stocks

3 TFSA Stock Picks With Explosive Potential

Want some explosive growth in your TFSA. These small-cap stocks have risks, but they could also have some massive reward.

Read more »

Dollar symbol and Canadian flag on keyboard

1 Canadian Stock to Buy and Hold Forever in Your TFSA

Shopify (TSX:SHOP) stock is back on the retreat, but it's still a top tech buy for TFSA investors seeking value…

Read more »