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Stericycle Inc SRCL

Morningstar Rating
$47.56 +0.55 (1.17%)
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Company Report

Stericycle Earnings: Lower Paper Prices a Near-Term Headwind but Turnaround to Accelerate in 2024

Putting aside lower recycled sorted office paper prices and surcharges compared with the year-ago quarter and revenue lost with divestitures, we thought Stericycle reported solid third-quarter results. The company’s competitively advantaged regulated waste and compliance services segment (67% of sales) reported 4% organic revenue growth, primarily driven by pricing actions. And while the secure information destruction services business saw a 12% decline in organic revenue, that decline was almost entirely due to lower paper prices and fuel and environmental surcharges. Nevertheless, Stericycle is better protected from paper price volatility now than in the past due to contract adjustments implemented by the current management team.

Price vs Fair Value

SRCL is trading at a 20% discount.
Price
$46.97
Fair Value
$29.00
Uncertainty
Medium
1-Star Price
$45.25
5-Star Price
$96.60
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Stericycle's turnaround efforts will prove successful, materially improving the firm's profitability and free cash flow.

Bears

Stericycle's Shred-It business is a no-moat business in secular decline. This ill-advised 2015 acquisition could haunt the current management team and prevent the firm from realizing its long-term financial goals.

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News

Trading Information

Previous Close Price
$47.01
Day Range
$46.7447.60
52-Week Range
$37.8255.95
Bid/Ask
$47.55 / $47.61
Market Cap
$4.40 Bil
Volume/Avg
122,220 / 539,643

Key Statistics

Price/Earnings (Normalized)
24.34
Price/Sales
1.62
Dividend Yield
Dividend Yield (Forward)
Total Yield
0.13%

Company Profile

Stericycle is the largest provider of medical waste disposal and data destruction (primarily paper shredding) services in the United States. Its next closest national competitor in the medical waste disposal space is Sharps Compliance, which generated $76 million of sales in fiscal 2021 before its 2022 acquisition (about 4% of Stericycle's global regulated waste and compliance revenue). Stericycle's data destruction business (Shred-It) is about twice the size of its closest competitor (Iron Mountain's information destruction segment). Stericycle has a global presence, with about 20% of its revenue earned outside North America.
Sector
Industrials
Industry
Waste Management
Stock Style Box
Small Core
Total Number of Employees
15,000

Competitors

Valuation

Metric
SRCL
WM
RSG
Price/Earnings (Normalized)
24.3429.7430.42
Price/Book Value
1.769.914.94
Price/Sales
1.623.473.49
Price/Cash Flow
13.4214.3214.82
Price/Earnings
SRCL
WM
RSG

Financial Strength

Metric
SRCL
WM
RSG
Quick Ratio
0.760.730.51
Current Ratio
0.900.840.58
Interest Coverage
1.277.285.22
Quick Ratio
SRCL
WM
RSG

Profitability

Metric
SRCL
WM
RSG
Return on Assets (Normalized)
3.41%7.59%5.76%
Return on Equity (Normalized)
7.44%34.32%16.99%
Return on Invested Capital (Normalized)
5.60%12.46%9.37%
Return on Assets
SRCL
WM
RSG

Waste Management Industry Comparables

Ticker
Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
WM
Waste Management IncFnr$68.9 Bil
RSG
Republic Services IncNjc$50.9 Bil
WCN
Waste Connections IncQvzy$34.9 Bil
VEOEF
Veolia Environnement SASdf$22.4 Bil
VEOEY
Veolia Environnement SA ADRFygjy$22.4 Bil
GFL
GFL Environmental IncVvtw$10.6 Bil
CLH
Clean Harbors IncBjrfls$8.7 Bil
CWST
Casella Waste Systems Inc Class AGbvxb$4.7 Bil
TSPCF
Cleanaway Waste Management LtdLyy$3.6 Bil