Covanta announced 3rd quarter earnings and a new President & CEO to lead a strategic review this evening. The company will be holding its earnings conference call tomorrow morning at 8:30am ET.

Earnings numbers seem good, with revenue and Adjusted EBITDA up from a year ago. although GAAP earnings and Free Cash Flow each fell by 2/3 or more.  All revenues grew significantly year over year, but these were offset by significant increases in plant operating expenses, which are most likely due to the addition measures to protect workers health from Covid-19.  I expect more color on this will come during the conference call tomorrow morning.

The appointment of the new CEO, Michael Ranger, who is a private equity fund manager focused on the energy and utility space was not expected; the former CEO's departure had not been announced previously.  He is described as "stepping down," which I take as a nice way of saying that the board asked him to submit his resignation.

However, the justification for the strategic review makes it clear what the transition is about: "The board believes that the value of the Company's assets and potential are not fully reflected in the market today.  Therefore, this strategic review is a well-timed opportunity to explore all options to enhance shareholder value, including assessing plans for each of our business lines and geographies."

I, too, believe that Covanta's value is not reflected in its stock price, which is why I have been buying even when I feel the broad market is generally overvalued.  I have mixed feelings about the review and the fact that it is being led by someone whose skills are more financial than operational in nature.  The choice of Mr. Ranger implies to me that the Board is seriously considering looking for a buyer for the company or parts of it.  Especially during a pandemic, I would prefer than the company be led by someone with more operational experience.  While the company's financial structure could not doubt be improved, I don't feel the middle of a pandemic is the right time for that.

I agree that a Wall Street type like Mr. Ranger is the right person to take actions likely to boost the stock price in the short term.  I'm simply never in a hurry to see the stock price go up.  I'm happy to hold an undervalued, dividend paying company for a long time.  Eventually, the market will recognize its value, but what is the hurry when I am being paid to wait with a 4% dividend yield?

The strategic review is likely to be good news for less patient investors.