Stericycle Stock Review
Stericycle is a company that offers a variety of products for businesses and consumers. It is known for the production of durable, low cost, environmentally friendly products, and has been in business for over a decade. The company is headquartered in California and has a wide variety of manufacturing facilities. The company is also known for having excellent gross profit margins, and is facing a class action lawsuit for its price-increasing scheme.
Gross profit margins are impressive
In the waste management sector, Stericycle has historically had higher gross profit margins than its competitors. The company has a track record of bolt on acquisitions and organic growth. As a result, the company is poised for solid returns in the coming years. However, the stock has lost more than half of its value since its 2015 highs. Investors need to decide whether the price is justified.
Stericycle provides waste management and compliance services to both commercial and government businesses. It operates processing facilities, landfills, and transfer sites worldwide, and serves a diverse customer base in international markets. The company’s operations are focused on small- and mid-sized customers. It also provides regulated compliance solutions to the healthcare industry.
In the last two years, the company has cut interest expenses significantly. The net result is a debt-to-equity ratio that has improved, albeit slowly. The company is well positioned to grow its free cash flow over the next few years.
EPS is $0.07
Stericycle is a leading provider of compliance-based solutions in North America. They also provide business-to-business services to customers in the United States, Canada, and internationally. In addition, they serve customers in the waste management industry.
In the third quarter of 2018, Stericycle reported adjusted earnings of $59.8 million. This number was above the Zacks Consensus Estimate of $0.58.
In the fourth quarter of 2022, Stericycle is expected to report $0.63 EPS. That is a boost from the $0.04 EPS that analysts predicted in the second quarter of the year. However, the magnitude of the estimate revisions could change after the company releases its earnings.
Stericycle expects to achieve a targeted annual Adjusted EBITDA benefit of $60 to 65 million. In order to accomplish this, they are considering a variety of strategic alternatives for the CRS. During the first half of the year, they realized $23.9 million in benefits.
They continue to execute Business Transformation. As a result, Stericycle remains on track to reach their goal. They will be reporting their latest quarterly results on February 27. In the second quarter, Stericycle sold non-core clean room services in the United States and hazardous waste operations in the UK. They also announced that they are pursuing strategic alternatives for the Communication and Related Services.
P/E multiples don’t align with growth rates and ROEs in the single digit range
While the P/E multiples of stericycle stock are high, it doesn’t mean that the growth rates or ROEs will be. The market has overvalued the sector and, as a result, investors may not realize that there are value opportunities to be had.
One of the most important financial metrics is return on equity. This is calculated by dividing a company’s net income by its total assets. This is a key measure to look at because it indicates whether the company has the ability to pay back loans to investors.
The stock is considered to be overvalued if it has a Total Return below 5%. However, this figure may be less for a well-established company. It’s likely that the best value in the stock is somewhere in the range of 18% or more.
The stock’s Total Return may be less than the average high growth firm, which is often characterized as having a large beta. A beta of 1.0 means that the stock is more likely to increase in value than decrease.
Class-action lawsuit accusing the company of price-increasing scheme
Seattle renters are suing 10 major real estate companies for fixing their prices. According to the lawsuit, real estate companies in the city were instigating an artificial increase in prices to artificially inflate the value of their properties.
The case, which is being pursued by Berger Montague PC, Lieff Cabraser Heimann & Bernstein LLP, and Justice Catalyst Law, states that the price increases occurred in “central neighborhoods” of Seattle. These neighborhoods include Queen Anne, Downtown Seattle, and South Lake Union.
The lawsuit also names the company, RealPage Inc., which allegedly inflated the price of multifamily residential real estate in the city. It is an affiliate of Thoma Bravo LP.
The lawsuit also names Stericycle, a company that provided sterilization services to healthcare providers. The firm’s billing software automatically boosted the rates of its customers. The contract that Stericycle entered into with its customers stated that price increases were only permitted when an “operational change” occurred.