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Reasons to Retain Stericycle (SRCL) Stock in Your Portfolio

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Stericycle, Inc. SRCL has an impressive Growth Score of A. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of quality and sustainability of its growth. The company has an expected long-term earnings per share (three to five years) growth rate of 6%.

The stock gained 24.4% in the past six months, outperforming 14.2% growth of the industry it belongs to.

What’s Behind the Rally?

Stericycle maintains a strong position in the waste management industry through long-term customer relationships, expansive operational network and technological improvements.

The company continues to focus on its comprehensive multiyear Business Transformation initiative aimed at improving long-term operational and financial performance. Key aspects within the program that the company is working on are portfolio rationalization, revenue growth, operational cost efficiencies, debt reduction and leverage management, and enterprise resource planning implementation.

Some Risks

Stericycle’s cash and cash equivalent balance of $59 million at the end of third-quarter 2020 was well below the long-term debt level of $1.88 billion, underscoring that the company doesn’t have enough cash to meet this debt burden. Also, the cash level can’t meet the short-term debt of $120 million.

Stericycle’s Communication and Related Services businesses have been weak for quite some time, weighing on its top line. Revenues from this business fell 43% year over year to $33.6 million in the third quarter.  Revenues declined 30.4% year over year in 2019 and 18.2% in 2018.

Zacks Rank and Other Stocks to Consider

Stericyclecurrently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are CRA International, Inc. CRAI, Gartner, Inc. IT and Insperity, Inc. NSP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Long-term earnings (three to five years) growth rate for CRA International, Gartner and Insperity is estimated at 13%, 13.5% and 15%, respectively.

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Stericycle, Inc. (SRCL) : Free Stock Analysis Report
 
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