Stericycle Earnings: Lower Paper Prices and Surcharges Weigh on Sales Growth, but Margin Improves

We’re maintaining our $60 per share fair value estimate for shares of Stericycle following its first-quarter earnings release. Stericycle’s stock price fell nearly 7% on April 25, perhaps due to the firm’s first-quarter revenue falling about 2% short of the FactSet consensus estimate. And while Stericycle’s organic revenue declined roughly 1% year over year, that decline was due to lower recycling revenue (from lower paper prices) and less fuel and environmental surcharges from the secure information destruction services, or SIDS, segment. However, the larger regulated waste and compliance services segment (67% of first-quarter revenue) realized 2% organic growth during the quarter. Management’s full-year organic revenue growth guidance is unchanged at 3%-5%.