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Stericycle Inc SRCL

Morningstar Rating
$55.65 +5.03 (9.94%)
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Company Report

Stericycle Earnings: We Think Stericycle Has Reached an Inflection Point for Profit Margins

Narrow-moat-rated Stericycle’s stock surged over 10% intraday on Feb. 28 after the firm reported solid fourth-quarter results and issued strong 2024 guidance. We believe the market is becoming more confident in Stericycle’s turnaround story. We had believed 2024 would be an inflection point for Stericycle, as management’s many efforts to improve the firm’s operations would finally begin to bear fruit and result in noteworthy margin expansion. And, indeed, management sees adjusted EBITDA growth of approximately 14% in 2024 on 3%-5% organic revenue growth, approximately in line with our previous expectations. After making modest tweaks to our five-year financial outlook, we’ve raised our fair value estimate for Stericycle to $60 per share, from $59 previously.

Price vs Fair Value

SRCL is trading at a 7% discount.
Price
$55.85
Fair Value
$48.00
Uncertainty
Medium
1-Star Price
$47.00
5-Star Price
$37.00
Economic Moat
Gnqsnb
Capital Allocation
Gwtwcnp

Bulls Say, Bears Say

Bulls

If Stericycle's turnaround efforts are successful, they will materially improve profitability and free cash flow.

Bears

Stericycle's Shred-It 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
$50.62
Day Range
$52.2556.67
52-Week Range
$37.7856.67
Bid/Ask
$55.63 / $55.64
Market Cap
$5.15 Bil
Volume/Avg
1.4 Mil / 471,669

Key Statistics

Price/Earnings (Normalized)
28.82
Price/Sales
1.92
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
0.11%

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 medical waste disposal 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
RSG
WCN
Price/Earnings (Normalized)
28.8234.9539.90
Price/Book Value
2.085.555.60
Price/Sales
1.923.945.38
Price/Cash Flow
15.8916.3920.41
Price/Earnings
SRCL
RSG
WCN

Financial Strength

Metric
SRCL
RSG
WCN
Quick Ratio
0.760.510.57
Current Ratio
0.900.580.68
Interest Coverage
1.275.224.55
Quick Ratio
SRCL
RSG
WCN

Profitability

Metric
SRCL
RSG
WCN
Return on Assets (Normalized)
3.41%5.76%6.19%
Return on Equity (Normalized)
7.44%16.99%14.58%
Return on Invested Capital (Normalized)
5.60%9.37%8.89%
Return on Assets
SRCL
RSG
WCN
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Name
Morningstar Rating for Stocks
Economic Moat
Market Cap
WM
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RSG
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WCN
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VEOEF
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VEOEY
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GFL
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CLH
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FMOCF
Fomento de Construcciones y Contratas SAYwf$6.1 Bil
CWST
Casella Waste Systems Inc Class AQsrzkr$5.2 Bil

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