Enviri Corp (NVRI): A Small Stock with Big Upside?

Like many conglomerates, Enviri Corporation (NVRI) has traded for many years at a discount to its sum-of-the-parts net worth. However, management has recently taken steps to close this discount with the announced sale of their largest division and a distribution of remaining assets to shareholders. The “New Enviri” that shareholders will receive in a few months has a clear path to significant margin expansion. In our view, the “New Enviri’s implied pro-forma share price of $4.85 represents only 35% of its estimated potential value of $13.75, suggesting the potential for over 180% upside.

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Why We are Bullish on NVRI:

• In November 2025, NVRI announced it had reached an agreement to sell its Clean Earth waste processing subsidiary to Veolia Environnement SA, a France-headquartered transnational company, for $3.05 billion in cash. The transaction should close in mid-2026. We consider this to be a transformational deal which has revalued NVRI closer to fair value, but the gap between fair value and its current stock price remains large.

• Importantly, a near-term catalyst exists that may cause this gap to narrow and prompt NVRI’s share price to adjust much higher. Namely, when the Clean Earth sale closes in about 2 ½ months, NVRI intends to pay out a one-time $14.50 to $16.50 per share dividend to its shareholders and spin out its remaining two businesses, Harsco Environmental (HE) and Harsco Rail (HR), to its shareholders in the form of a publicly traded stock called New Enviri. HE is the largest provider of onsite environmental services to the global metals industry; and HR manufactures highly engineered railway track maintenance equipment such as surfacing equipment, grinding products that remove cracks and surface defects in tracks.

• The pro forma New Enviri company trades at a sharp enterprise value (EV)-to-EBITDA and EV-to-revenue discounts to similarly positioned companies. Notably, after factoring in the large dividend payment, pro-forma New Enviri trades at $4.85 a share, or a multiple of ~5.6x enterprise value (EV) to what we believe may be trough EBITDA. Normalizing EBITDA for non-recurring losses in the “New Enviri’s” rail segment reduces the multiple to a mere 4.1x. This compares to an average multiple of about a 10.7x its peer average. At 8x Normalized EBITDA, still a meaningful discount to peers, new ENVIRI would trade at $13.75 vs a current implied price of $4.85.

• A possible reason for this enormous difference in NVRI’s fair value versus its share price: HE and HR have faced challenging operating environments over the past few years. Global economic uncertainty, coupled with the imposition of steep steel tariffs, have caused revenue and EBITDA at both units to decline over this period, particularly at HR.

• However, past may not be prologue. Harsco Environmental holds physically embedded positions inside its customers’ steel mills that would require substantial operational disruption to displace, giving it a competitive moat with no close parallel in the industrial services sector. It is a mission-critical, long-duration business with GDP-plus growth characteristics, margin expansion potential as new sites reach run-rate profitability, and identifiable upside from European steel volume recovery. Rail is a time-limited, quantifiable drag, not a structural impairment. In fact, NVRI is allocating $130-200mm of proceeds from the sale of Clean Earth to establish reserves for future costs of completing or renegotiating the loss-making ETO contracts, meaning remaining operating losses for the Rail segment have largely been pre-funded.

What is the Bear Case? If the Clean Earth sales transaction were not to close, NRVI’s stock price would likely decline sharply. However, such a deal break seems very unlikely. The two key remaining necessary authorizations are the SEC’s approving NVRI’s Form 10 filing and NVRI’s shareholders’ voting to green light the shareholder value-creating deal. Neither of these approvals appear to be even slightly controversial.

DISCLAIMER: L2 OWNS ENVIRI CORP IN ONE OF OUR STRATEGIES AND COULD BE BOUGHT OR SOLD ONE BUSINESS DAY AFTER PUBLICATION.

Investment Summary

Like many conglomerates, Enviri Corporation (NVRI) has traded for many years…