PESI

Perma-Fix Environmental Services($PESI) Management Buying Spree After 60% Plunge, 120% Upside to Target

09/12/2025 20:13

Perma-Fix Environmental Services ($PESI) is a specialized company providing radioactive waste treatment and environmental remediation services, primarily serving U.S. government agencies and private nuclear facilities. The company operates through Treatment and Services segments, playing a crucial role in major government projects such as the U.S. Navy's RADMAC III contract. $PESI shares are currently under extreme pressure. After reaching $12.76 in late July 2024, the stock has been in persistent decline, plummeting to $6.96 in March 2025. Currently trading at $8.19 as of September 11, the stock has fallen approximately 60% from its peak. This reflects a combination of illiquidity typical of small-cap stocks and poor operational performance. However, notable activity has emerged amid this sharp decline. Management has been aggressively purchasing shares near these trough levels. When the stock crashed to the low $7 range in March 2025, key executives including President Mark Duff, Officer Louis Centofanti, COO Troy Eshleman, and CFO Ben Naccarato made concentrated purchases. Duff alone bought 3,050 shares during March, sending a strong confidence signal. More intriguingly, this buying pattern has continued recently in September. Following Director Larry Shelton's purchase of 1,000 shares at $9.61 on September 9, additional purchases occurred on September 11 with Shelton buying another 1,000 shares at $8.58 and President Duff acquiring 897 shares at $8.05. This suggests management views current prices as significantly undervalued. However, contrasting transactions also warrant attention. On May 30, 2025, Director Kerry Duggan sold 16,634 shares in a large transaction at a weighted average price of $10.92, representing approximately $180,000. This sale occurred during a temporary recovery phase, indicating some insiders remain cautious. Operationally, $PESI is clearly facing challenging times. Q2 2024 revenue declined 44.1% year-over-year to $13.99 million, while Q3 dropped 23.2% to $16.81 million. Per-share losses also widened to $0.27 in Q2 and $0.57 in Q3. However, recent results show some positive signals. Q2 2025 revenue increased 4.3% year-over-year to $14.59 million, with particularly notable gross margin improvement from -14.3% last year to 13.7%, demonstrating enhanced operational efficiency. The environmental services industry is highly sensitive to government policy and regulatory changes. Radioactive waste treatment requires high barriers to entry and specialized expertise, offering substantial profitability once contracts are secured. $PESI expects momentum from the Navy's RADMAC III contract and additional revenue from the delayed DFLAW program to materialize in the second half of 2025. Key indicators investors should monitor include: government contract announcements and backlog growth, continued quarterly gross margin improvement trends, and ongoing management purchase activity. Warning signs include: delays or cancellations of major government contracts, reversal of gross margin improvement trends, and increased management selling activity. In an optimistic scenario, government contract momentum could drive revenue growth alongside profitability improvements, potentially reaching the analyst target price of $18. The most likely base case involves gradual operational improvement with share price recovery to the $10-12 range. However, risk scenarios could see further declines from current levels due to contract disruptions or broader industry challenges. Overall, $PESI presents an intriguing situation with extreme undervaluation, strong management buying signals, and emerging operational improvements worth consideration. However, the small-cap nature requires careful attention to high volatility and liquidity risks.