Due Diligence for Investors in Horsehead Holding Corp.
The company press release linked below discusses the Zochem operation and its goal toward a wider level of global distribution. The Motley Fool article also linked below looks at the company’s performance results for the quarter ended September 30th including mention of the zinc markets impact on financial results. The Seeking Alpha article by Haas has a bullish outlook of the company, but also points out the challenges the company faces. Haas bring the view of a longer term follower of ZINC to our due diligence.
Our View: ZINC appears to be a well-run company today even if it hasn’t always been. Even well-run companies suffer when they’re involved in commoditized products and the market goes soft. The market for ZINC’s products was soft in the recent quarter contributing, to a certain degree, to the company’s losses.
On the positive side the company’s operational performance is improving according to all measurable operating metrics. It is unlikely that ZINC will provide enough cash to cover operating and development expenses in the near term but they already have a $50 million equity placement ready to implement. That level of dilution shouldn’t have a long term negative impact on the company’s financial position.
ZINC could be a good long term hold for investors. Analysts have a target range from $8.00 per share on the low side to $17.00 on the high side. Today’s price of $2.50 may be a good level to buy and hold at. We believe these shares could go up in the short term even if they fail to come near analysts’ estimates.
Seeking Alpha – Bram de Haas – November 10, 2015
ZINC – Press Release – November 11, 2015
The Motley Fool = Matthew DiLallo – November 9, 2015
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