Horsehead Holding: Zacks’ Bear of the Day Play

Horsehead Holding Corp (ZINC) is the parent company of Horsehead Corporation, INMETCO and Zochem. They are a leading producer of zinc and zinc-based products and a leading recycler of electric arc furnace dust.

Headquartered in Pittsburgh, Pa., the company has production and recycling operations at seven facilities located in the U.S. and in Canada.

Lackluster Results

The company reported its Q4 2014 results on February 24. Net loss for the quarter was $4.1 million or $0.08 per share, compared with a net loss of $12.4 million or $0.26 per share for the same period in 2013. Net sales were up 2.9% to $106.6 million thanks to higher zinc and nickel prices, a favorable change in noncash hedge charges and shipments of zinc calcine which more than offset the decline in shipments of finished zinc products.

Update on Mooresboro Facility

On April 1, the company provided an update on production at its Mooresboro NC facility as a planned outage at the facility in February adversely impacted its production. The facility produced approximately 10,000 tons of zinc in Q1 2015, compared to 12,000 tons in the previous quarter. The company now expects to ramp up production to 75% of the capacity during the second quarter, versus by the end of first quarter indicated earlier.

Downward Revisions

Due to disappointing results and shutdown, quarterly and annual estimates have been revised sharply downwards in the past few weeks by analysts.

Zacks Consensus Estimates for the current and next year now stand at ($0.20) per share and $0.75 per share, down from $0.22 per share and $0.96 per share, 60 days ago.

Falling estimates sent ZINC to a Zacks Rank # 5 (Strong Sell) last week.

The Bottom Line

The stock has been witnessing negative earnings momentum for the past few weeks.  Further it scores quite poorly on Styles, with ‘F’ in Growth and Value and ‘D’ in Momentum. Zacks industry rank of 239 out of 265 also indicates underperformance in the short to medium term. Weak commodity prices have also made the outlook cloudy for the stock. As such investors may like to avoid this stock for the time being.

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