Update: Horsehead Holding Earnings

Aug.14.14 | About: Horsehead Holding (ZINCQ)

Summary

Horsehead Holding reported second quarter 2014 revenue of $126.27 million, compared to the consensus estimate of $110.79 million.

The company’s consolidated net loss came in at $5.1 million, or $0.10 per diluted share.

In my original analysis I predicted a 35% upside for the stock from $12.38, based on bullish outlook for zinc prices.

The stock is currently trading near $20, which confirms my bull thesis, and I believe that it's heading towards $25.

Horsehead Holding (ZINC) reported its second quarter 2014 revenue of $126.27 million, compared to the consensus estimate of $110.79 million. However, the company had a net loss of $5.1 million, or $0.10 per diluted share in the quarter, missing the analysts' consensus estimate of $0.04 by $0.06. Adjusted EBITDA came in at $9.1 million for the quarter compared to $6.6 million for the same quarter last year.

Horsehead produces zinc by recycling dust from electric-arc furnaces. The company's new plant at Mooresboro, North Carolina could be a game-changer for the company's earnings and its shares going ahead. Zinc production at the company's Mooresboro plant commenced on May 21, 2014, and the first full month of production exceeded internal projections for the first month of a ramp up period, the company said during its second quarter earnings release. Meanwhile, the company permanently closed the zinc smelter in its Monaca, Pennsylvania facility at the end of April 2014.

The Mooresboro plant could lower the company's break-even costs by $0.20/lb. of zinc to $0.40-$0.45, compared to production costs of $0.85/lb. for miner Teck Resources (NYSE:TCK), which is expected to be a huge positive for the company's future earnings. Further, the new plant at Mooresboro will produce a higher-grade of zinc than the now-closed facility in Monaca, which is expected to meaningfully expand Horsehead's market. In my original article, I predicted a 35% upside for the stock from $12.38, based on bullish outlook for zinc prices. Currently the stock is trading near $20, and I expect that it will soon trade around $24-25, based on the potential of the company's new Mooresboro plant.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.