Head-To-Head Survey: Gevo (GEVO) & Covanta (CVA)

Gevo (NASDAQ: GEVO) and Covanta (NYSE:CVA) are both small-cap oils/energy companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Earnings and Valuation

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This table compares Gevo and Covanta’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gevo $27.54 million 0.38 -$37.22 million ($1.61) -0.29
Covanta $1.75 billion 1.08 $57.00 million ($0.37) -39.19

Covanta has higher revenue and earnings than Gevo. Covanta is trading at a lower price-to-earnings ratio than Gevo, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Gevo has a beta of 2.53, suggesting that its share price is 153% more volatile than the S&P 500. Comparatively, Covanta has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Profitability

This table compares Gevo and Covanta’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gevo -89.44% -38.20% -27.28%
Covanta 3.25% -13.02% -1.10%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Gevo and Covanta, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gevo 0 1 1 0 2.50
Covanta 0 1 5 0 2.83

Gevo presently has a consensus target price of $12.00, indicating a potential upside of 2,502.47%. Covanta has a consensus target price of $17.67, indicating a potential upside of 21.84%. Given Gevo’s higher probable upside, analysts plainly believe Gevo is more favorable than Covanta.

Dividends

Covanta pays an annual dividend of $1.00 per share and has a dividend yield of 6.9%. Gevo does not pay a dividend. Covanta pays out -270.3% of its earnings in the form of a dividend.

Institutional & Insider Ownership

4.0% of Gevo shares are held by institutional investors. Comparatively, 91.7% of Covanta shares are held by institutional investors. 0.3% of Gevo shares are held by company insiders. Comparatively, 11.6% of Covanta shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Covanta beats Gevo on 13 of the 16 factors compared between the two stocks.

About Gevo

Gevo, Inc., a renewable chemicals and biofuels company, focuses on the development and commercialization of alternatives to petroleum-based products based on isobutanol produced from renewable feedstocks in the United States. It operates through two segments, Gevo, Inc. and Gevo Development/Agri-Energy. The company engages in the research and development, and production of isobutanol; development of its proprietary biocatalysts; production and sale of biojet fuel; and retrofit process of chemicals and biofuels. It is also involved in the production of ethanol, isobutanol, and related products. In addition, the company produces and separates its renewable isobutanol through the Gevo Integrated Fermentation Technology platform. The company was formerly known as Methanotech, Inc. and changed its name to Gevo, Inc. in March 2006. Gevo, Inc. was founded in 2005 and is headquartered in Englewood, Colorado.

About Covanta

Covanta Holding Corporation, through its subsidiaries, provides waste and energy services to municipal entities primarily in the United States and Canada. It owns and operates infrastructure for the conversion of waste to energy, as well as engages in related waste transport and disposal, and other renewable energy production businesses. The company disposes waste and generates electricity and/or steam; sells metal recovered during the energy-from-waste (EfW) process; and offers waste management solutions, such as site clean-up, wastewater treatment, transportation and logistics, recycling, and depackaging. It owns and operates 43 EfW facilities; and 5 additional energy generation facilities, including wood biomass and hydroelectric renewable energy production facilities in North America. The company also owns and operates 17 transfer stations, 19 material processing facilities, 1 regional metals recycling facility, and 4 landfills. Covanta Holding Corporation has a strategic partnership with the Green Investment Group Limited to develop, fund, and own EfW projects in Ireland and the United Kingdom. The company was formerly known as Danielson Holding Corporation and changed its name to Covanta Holding Corporation in September 2005. Covanta Holding Corporation was founded in 1960 and is headquartered in Morristown, New Jersey.

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