Stericycle Delivered Solid Organic Revenue Growth and Sequential Margin Expansion During Its Q2

Narrow-moat-rated Stericycle's second-quarter performance featured solid organic revenue growth and sequential margin expansion. Sales of $680 million and adjusted EPS of $0.48 slightly outpaced FactSet consensus estimates. The stock reacted positively to the results (it closed the Aug. 5 trading day up 7%), as Stericycle’s financial performance had languished behind consensus in previous quarters. Management modestly raised its full-year organic revenue growth guidance to 4%-6% (from 3%-5% previously) , primarily because of favorable pricing developments within the business. However, management lowered its adjusted EPS and free cash flow guidance to reflect higher inflationary operating expenses, working capital adjustments, and FCPA settlement payments. We maintain our fair value estimate of $59 per share.