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Clean Harbors, Inc. (CLH) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of Clean Harbors (CLH - Free Report) ? Shares have been on the move with the stock up 36.9% over the past month. The stock hit a new 52-week high of $118.92 in the previous session. Clean Harbors has gained 19.1% since the start of the year compared to the -17.1% move for the Zacks Business Services sector and the -4.5% return for the Zacks Waste Removal Services industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 3, 2022, Clean Harbors reported EPS of $2.44 versus consensus estimate of $1.53 while it beat the consensus revenue estimate by 9.89%.

For the current fiscal year, Clean Harbors is expected to post earnings of $6.78 per share on $5.08 billion in revenues. This represents an 86.26% change in EPS on a 33.43% change in revenues. For the next fiscal year, the company is expected to earn $6.57 per share on $5.26 billion in revenues. This represents a year-over-year change of -3.06% and 3.51%, respectively.

Valuation Metrics

Clean Harbors may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Clean Harbors has a Value Score of B. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 17.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 22X. On a trailing cash flow basis, the stock currently trades at 12.6X versus its peer group's average of 15.7X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Clean Harbors currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Clean Harbors meets the list of requirements. Thus, it seems as though Clean Harbors shares could have a bit more room to run in the near term.

How Does CLH Stack Up to the Competition?

Shares of CLH have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Republic Services, Inc. (RSG - Free Report) . RSG has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of C.

Earnings were strong last quarter. Republic Services, Inc. beat our consensus estimate by 11.86%, and for the current fiscal year, RSG is expected to post earnings of $4.78 per share on revenue of $13.41 billion.

Shares of Republic Services, Inc. have gained 12.2% over the past month, and currently trade at a forward P/E of 30.25X and a P/CF of 17.66X.

The Waste Removal Services industry is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CLH and RSG, even beyond their own solid fundamental situation.

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