Stock (Symbol) |
Stericycle (SRCL) |
Stock Price |
$122 |
Sector |
| Food & Necessities |
Data is as of |
| October 29, 2015 |
Expected to Report |
| Feb 3 – Feb 8 |
Company Description |
 Stericycle, Inc. is engaged in the business of providing regulated and compliance solutions to healthcare and commercial businesses. The Company’s solutions include the collection and processing of specialized waste for disposal, and a variety of training, consulting, recall/return, communication, and compliance services, which include training, consulting, inbound/outbound communications, data reporting, and other regulatory compliance services. The Company operates regulated waste management networks in the United States, Argentina, Brazil, Canada, Chile, Ireland, Japan, Mexico, Portugal, Romania, South Korea, Spain, and the United Kingdom. The Company operates through two segments: United States and International. The Company’s networks include a total of 181 processing facilities, 214 transfer sites, and 97 other service facilities. Its regulated waste processing technology is primarily autoclaving. Source: Thomson Financial |
Sharek’s Take |
 Hazardous waste specialist Stericycle (SRCL) dove from $150 to $120 after it missed earnings estimates. SCRL had 0% profit growth on a 8% rise in revenue for the qtr. Analysts expected 9% profit growth. The company blamed higher legal costs, expenses from its recent Shred-It acquisition, and foreign exchange issues for the shortfall and the stock fell from around $150 to around $120 on the news. SCRL normally sells for 28-29 times earnings, and now sells for 24 times. I would love to say this is a buying opportunity, get in, but these issues could linger. And this 15% grower still sells for a premium of 24x earnings, so it’s not really on sale even though Shred-It should add 10% to 2016’s profits. In end I feel SRCL could stay down here a little while as profits are set to fall 2% next qtr. This is a good buying opportunity for long-term conservative investors, but growth investors might want to take a wait-and-see approach. |
One Year Chart |
 I was hoping for a buying opportunity to get SRCL for the Growth Portfolio, but now that the stock’s down I’m hesitant to get in because of the F/X factor. The strong dollar is hurting a lot of large companies, and their stocks aren’t recovering. Plus, the dollar continues to be strong. This issue should persist. Notice the profit growth along the bottom as well as Estimates to the right. Not great figures. And SCRL just missed, so that could happen again next qtr. |
Fair Value |
 Although I’m bearish on SRCL’s short-term prospects, it consistently sells for 28-29 times earnings long-term. Thus my Fair Value stands at 29x earnings, or $150 a share. Solid upside with the stock around $120 right now. |
Bottom Line |
 SRCL’s profits have grown each year dating back to the 1990s and management uses profits to make more acquisitions as opposed to paying a dividend.With 1/3rd of Stericycle sales being International, I feel the issues the company is having will persist. Sales last qtr would have risen 13% buy that got shaved down to 8%. I feel this stock is a good selection for the Conservative Stock Portfolio, but I will hold off on adding it to the Growth Portfolio as (1) the stock’s not timely, (2) it only has an estimated long-term growth rate of 15%, and (3) the strong dollar could hamper results in 2016. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 16 of 30 |
