EnergySolutions navigates turmoil

Salt Lake City-based EnergySolutions Inc. this month will mark its one-year anniversary as a publicly traded company — a year that has been a roller coaster as the stock price has veered from a high of $29 in November 2007 to a low of $2.38 this past September.

EnergySolutions shares closed at $5.25 on Friday, 82 percent below the peak price last year. The company's shares plunged most sharply after the company in October issued a revised guidance statement that lowered its forecast below what Wall Street analysts and investors had expected.

In the statement, EnergySolutions estimated that gross revenues for fiscal 2008 would be in the range of $165 million to $180 million, and the company anticipated that its financial performance for fiscal 2009 would be similar to this year.

The share-price volatility largely has been due to the historic economic downturn the nation is experiencing, according to Jill Sigal, the company's executive vice president of corporate communications and government relations.

"It's not just EnergySolutions that has been affected," she said. "All of our competitors have gone down proportionally, as well as companies in other industries. It's having an effect on all of us."

Even so, the company is on solid footing, she said.

"We have life-of-plant agreements with 82 nuclear reactors out of 104 nuclear reactors," she said. "Those contracts are signed. That is a great base business."

From an investment perspective, however, some analysts have voiced concern about the company's business model and reliance upon governments for most of its waste-disposal and management business.

The United Kingdom Nuclear Decommissioning Authority comprised about 69 percent of EnergySolutions' revenues for the six months ending June 30, according to Eric Fox, founder of Brittain Capital Management, based in Birmingham, Ala. The U.S. Department of Energy provided 9 percent of revenues in the same period.

He added that other industries that rely on governments have volatile revenue streams, as well, including the hospital industry, which is dependent upon programs like Medicaid and Medicare for reimbursement of services provided.

As the 52-week share-price range suggests, investors are still trying to determine if the company is a strong as advertised.

"The expectations that were built into the stock weren't delivered on," said Wedbush Morgan Securities analyst Al Kaschalk. The drop in price was "the market's way of correcting," he said.