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Clean Harbors (CLH) Rides on Buyouts & Service Offerings
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Clean Harbors, Inc. (CLH - Free Report) stock has rallied 17.8% on a year-to-date basis, outperforming the 6.3% rise of the industry it belongs to.
The company is benefitting from strong organic growth, acquisition of Veolia Business, pricing initiatives, improved mix of waste streams and effective spread management.
Strength across Industrial Services lines of business in both the United States and Canada, higher volumes in the company’s disposal network and improving industrial economy, which drive key industry verticals like chemical and manufacturing, are other growth catalysts.
Clean Harbors reported strong second-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Earnings of 54 cents per share beat the consensus mark by 24 cents and exceeded the year-ago figure of 24 cents. Total revenues of $849.1 million beat the consensus estimate by $11.9 million and increased 12.8% year over year.
What’s Driving Clean Harbors?
Acquisitions have been contributing to Clean Harbors’ top-line growth. On Feb 23, the company completed the acquisition of the U.S. Industrial Cleaning Business of Veolia Environmental Services North America LLC (the "Veolia Business") for $120.0 million. Veolia assets contributed $63.9 million of revenues in the first half of 2018. In 2017, Clean Harbors completed four acquisitions that contributed revenues of almost $14.5 million. Additionally, the buyouts have helped the company in multiple lines of services, such as waste minimization, remodeling of its fleet of trucks, growth in daylighting and hydro excavation services markets, and complement its closed loop model in relation to the sale of oil products.
The company offers a broad range of services such as end-to-end hazardous and non-hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. It has gained popularity as a leading emergency response firm through dedicated staff and integrated facilities. Clean Harbors looks strong on the back ofits expansive infrastructure, specialized equipment, capital base and customer relationships.
The company’s focus on improving its efficiency and lowering operating costs through advanced technology, process efficiencies and stringent cost management are also appreciable. The company has a competitive advantage in terms of treatment, storage and disposal facilities (TSDFs). Hence, by setting-up additional service locations near TSDFs, it expects to minimize capital expenditures and increase its market share. This, in turn, is likely to drive additional waste into the company’s existing facilities, thereby increasing capacity utilization and enhancing overall profitability.
We are also impressed with Clean Harbors’ consistent efforts to return value to shareholders in the form of share repurchases. In first half of 2018, Clean Harbors repurchased approximately more than 530,000 shares for $26.5 million. In 2017, 2016 and 2015, the company returned $48.9 million, $22.2 million and $73.3 million to its shareholders, respectively, through share buybacks. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business.
Some other top-ranked stocks in the broader Business Services sector include Genpact Limited (G - Free Report) , WEX Inc. (WEX - Free Report) and Total System Services, Inc. . All the stocks carry a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Genpact, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Clean Harbors (CLH) Rides on Buyouts & Service Offerings
Clean Harbors, Inc. (CLH - Free Report) stock has rallied 17.8% on a year-to-date basis, outperforming the 6.3% rise of the industry it belongs to.
The company is benefitting from strong organic growth, acquisition of Veolia Business, pricing initiatives, improved mix of waste streams and effective spread management.
Strength across Industrial Services lines of business in both the United States and Canada, higher volumes in the company’s disposal network and improving industrial economy, which drive key industry verticals like chemical and manufacturing, are other growth catalysts.
Clean Harbors reported strong second-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Earnings of 54 cents per share beat the consensus mark by 24 cents and exceeded the year-ago figure of 24 cents. Total revenues of $849.1 million beat the consensus estimate by $11.9 million and increased 12.8% year over year.
What’s Driving Clean Harbors?
Acquisitions have been contributing to Clean Harbors’ top-line growth. On Feb 23, the company completed the acquisition of the U.S. Industrial Cleaning Business of Veolia Environmental Services North America LLC (the "Veolia Business") for $120.0 million. Veolia assets contributed $63.9 million of revenues in the first half of 2018. In 2017, Clean Harbors completed four acquisitions that contributed revenues of almost $14.5 million. Additionally, the buyouts have helped the company in multiple lines of services, such as waste minimization, remodeling of its fleet of trucks, growth in daylighting and hydro excavation services markets, and complement its closed loop model in relation to the sale of oil products.
The company offers a broad range of services such as end-to-end hazardous and non-hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. It has gained popularity as a leading emergency response firm through dedicated staff and integrated facilities. Clean Harbors looks strong on the back ofits expansive infrastructure, specialized equipment, capital base and customer relationships.
The company’s focus on improving its efficiency and lowering operating costs through advanced technology, process efficiencies and stringent cost management are also appreciable. The company has a competitive advantage in terms of treatment, storage and disposal facilities (TSDFs). Hence, by setting-up additional service locations near TSDFs, it expects to minimize capital expenditures and increase its market share. This, in turn, is likely to drive additional waste into the company’s existing facilities, thereby increasing capacity utilization and enhancing overall profitability.
We are also impressed with Clean Harbors’ consistent efforts to return value to shareholders in the form of share repurchases. In first half of 2018, Clean Harbors repurchased approximately more than 530,000 shares for $26.5 million. In 2017, 2016 and 2015, the company returned $48.9 million, $22.2 million and $73.3 million to its shareholders, respectively, through share buybacks. Such moves indicate the company’s commitment to create value for shareholders and underline its confidence in its business.
Zacks Rank & Other Stocks to Consider
Currently, Clean Harbors sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Some other top-ranked stocks in the broader Business Services sector include Genpact Limited (G - Free Report) , WEX Inc. (WEX - Free Report) and Total System Services, Inc. . All the stocks carry a Zacks Rank #2 (Buy).
The long-term expected EPS (three to five years) growth rate for Genpact, WEX and Total System Services is 10%, 15% and 14.6%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>