A month has gone by since the last earnings report for Stericycle (SRCL Quick QuoteSRCL - Free Report) . Shares have lost about 6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Stericycle due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Stericycle Q3 Earnings Miss Estimates

Stericycle third-quarter 2021 earnings and revenues missed the Zacks Consensus Estimate.

Earnings per share (excluding $1.16 from non-recurring items) of 44 cents missed the Zacks Consensus Estimate by 22.8% and declined 35.3% year over year. The downside can be attributed to lower operating performance.

Revenues of $648.9 million also missed the consensus mark by 2.8%, but moved up 2% year over year on the back of higher Regulated Waste and Compliance Services revenues. These were partially offset by the impact of divestitures.

Let’s check the numbers in detail.

Revenues by Service

Regulated Waste and Compliance Services revenues increased 2.8% year over year on a reported basis and 6.8% on an organic basis to $461.7 million. The segment contributed 71.2% to total revenues.

Secure Information Destruction revenues dropped marginally year over year on a reported basis and 1.1% organically to $187.2 million. The segment contributed 28.8% to total revenues.

Revenues by Geography

Revenues from North America were $523.9 million, up 1.3% year over year on a reported basis and 3.6% organically. International revenues of $125 million increased 4.8% year over year on a reported basis and 7.9%, organically.

Profitability Performance

Adjusted gross profit in the reported quarter amounted to $239.7 million, down 10.3% from the year-ago quarter’s levels. Adjusted gross profit margin was 36.9%, down from 42% in the prior-year quarter.

Adjusted operating income was $72.5 million, down 28.2% from the year-ago quarter’s levels. Adjusted operating income margin was 11.2%, down from 15.9% in the prior-year quarter.

Adjusted EBITDA was $99.9 million, down 21.2% from the year-ago quarter’s figure. Adjusted EBITDA margin was 15.4%, up from 19.9% in the prior-year quarter.

Balance Sheet & Cash Flow

Stericycle exited third-quarter 2021 with cash and cash equivalents of $37.5 million compared with $61.7 million at the end of the prior quarter. Long-term debt was $1.62 billion compared with $1.60 billion at the end of the prior quarter.

The company generated $52.4 million of net cash from operating activities and capex was $26.1 million in the quarter. Free cash flow came in at $101.5 million in the quarter.

Outlook

For 2021, the company anticipates capital expenditures in the range of $110-$120 million (previous outlook: $140-$160 million).

For the fourth quarter of 2021, the company expects low single-digit year-over-year consolidated organic revenue growth rate. Free cash flow generation is expected to be least $45 million.

 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month. The consensus estimate has shifted -5.65% due to these changes.

VGM Scores

At this time, Stericycle has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Stericycle has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.