We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
What Lies Ahead for Stericycle (SRCL) this Earnings Season?
Read MoreHide Full Article
Waste management firm Stericycle, Inc. (SRCL - Free Report) is scheduled to report first-quarter 2017 results after the closing bell on May 4. In the last reported quarter, adjusted earnings exceeded the Zacks Consensus Estimate by 7 cents. The company has a mixed earnings surprise history with two beats and a miss in the trailing four quarters with an average positive surprise of 2.3%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Stericycle is focused on increasing its SQ customer base, as it generates higher gross margins than the LQ customers. In addition, Stericycle offers multiple service offerings to its customers, which add to the value of each account. For its SQ customers, the services include Steri-Safe and clinical compliance offerings and for LQ customers services comprise Bio Systems and Rx Waste Compliance. The company earlier inked a definitive agreement to acquire information destruction services provider, Shred-it International for $2.3 billion in cash. With Shred-it on board, Stericycle is expected to enhance its core compliance solutions portfolio and offer specialized services, thereby augmenting its value proposition to clients. These efforts are likely to improve the company’s profitability.
A significant portion of Stericycle’s historical growth was due to the successful integration of acquisitions in both domestic and international markets. The company is continuously on the lookout for strategic acquisitions that will grow its market share and expand its geographic base. The acquisition pool of the company remains robust in multiple geographies and lines of business. International growth rates are expected to accelerate due to increasing customer adoption of multiple services and expansion into new lines of business. The global acquisition strategy increases Stericycle’s customer base by providing a long-term growth platform for selling multiple services. Whether the customer is a large hospital system or a retail chain, Stericycle provides multiple services to help them improve their operations and achieve their goals. As customers adopt these multiple services, they can almost triple their revenues going forward.
However, Stericycle operates in a highly-competitive market. The barriers to entry into the regulated waste collection and disposal business and the pharmaceutical returns business are very low. Competitors may also resort to aggressive pricing to gain market share. In the past, the company was forced to reduce prices for LQ customers due to competitive pressures, which could be repeated in the future. This forces us to be bearish on the stock to some extent.
High operating costs continue to be a headwind for Stericycle. In addition, a challenging macroeconomic environment and volatility in foreign exchange are affecting margins and the bottom line.
Earnings Whispers
Our proven model does not conclusively show that Stericycle is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Stericycle has an Earnings ESP -0.96%. This is because Most Accurate estimate stands at $1.03 and Zacks Consensus Estimate is pegged at $1.04. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Stericycle has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive ESP to be confident about an earnings beat.
Note, we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Beacon Roofing Supply, Inc. (BECN - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3.
Saul Centers Inc. (BFS - Free Report) has an Earnings ESP of +5.81% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
What Lies Ahead for Stericycle (SRCL) this Earnings Season?
Waste management firm Stericycle, Inc. (SRCL - Free Report) is scheduled to report first-quarter 2017 results after the closing bell on May 4. In the last reported quarter, adjusted earnings exceeded the Zacks Consensus Estimate by 7 cents. The company has a mixed earnings surprise history with two beats and a miss in the trailing four quarters with an average positive surprise of 2.3%.
Let’s see how things are shaping up for this announcement.
Factors to Consider
Stericycle is focused on increasing its SQ customer base, as it generates higher gross margins than the LQ customers. In addition, Stericycle offers multiple service offerings to its customers, which add to the value of each account. For its SQ customers, the services include Steri-Safe and clinical compliance offerings and for LQ customers services comprise Bio Systems and Rx Waste Compliance. The company earlier inked a definitive agreement to acquire information destruction services provider, Shred-it International for $2.3 billion in cash. With Shred-it on board, Stericycle is expected to enhance its core compliance solutions portfolio and offer specialized services, thereby augmenting its value proposition to clients. These efforts are likely to improve the company’s profitability.
A significant portion of Stericycle’s historical growth was due to the successful integration of acquisitions in both domestic and international markets. The company is continuously on the lookout for strategic acquisitions that will grow its market share and expand its geographic base. The acquisition pool of the company remains robust in multiple geographies and lines of business. International growth rates are expected to accelerate due to increasing customer adoption of multiple services and expansion into new lines of business. The global acquisition strategy increases Stericycle’s customer base by providing a long-term growth platform for selling multiple services. Whether the customer is a large hospital system or a retail chain, Stericycle provides multiple services to help them improve their operations and achieve their goals. As customers adopt these multiple services, they can almost triple their revenues going forward.
However, Stericycle operates in a highly-competitive market. The barriers to entry into the regulated waste collection and disposal business and the pharmaceutical returns business are very low. Competitors may also resort to aggressive pricing to gain market share. In the past, the company was forced to reduce prices for LQ customers due to competitive pressures, which could be repeated in the future. This forces us to be bearish on the stock to some extent.
High operating costs continue to be a headwind for Stericycle. In addition, a challenging macroeconomic environment and volatility in foreign exchange are affecting margins and the bottom line.
Earnings Whispers
Our proven model does not conclusively show that Stericycle is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Stericycle has an Earnings ESP -0.96%. This is because Most Accurate estimate stands at $1.03 and Zacks Consensus Estimate is pegged at $1.04. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stericycle, Inc. Price and EPS Surprise
Stericycle, Inc. Price and EPS Surprise | Stericycle, Inc. Quote
Zacks Rank: Stericycle has a Zacks Rank #3. Though a favorable Zacks Rank increases the predictive power of ESP, we need a positive ESP to be confident about an earnings beat.
Note, we caution against stocks with a Zacks Rank #4 or #5 (Sell-rated) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
BioMarin Pharmaceutical Inc. (BMRN - Free Report) has an Earnings ESP of +20% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Beacon Roofing Supply, Inc. (BECN - Free Report) has an Earnings ESP of +16.67% and a Zacks Rank #3.
Saul Centers Inc. (BFS - Free Report) has an Earnings ESP of +5.81% and a Zacks Rank #3.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>