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Why Is Clean Harbors (CLH) Up 11.4% Since Last Earnings Report?

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A month has gone by since the last earnings report for Clean Harbors (CLH - Free Report) . Shares have added about 11.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors due for a pullback? 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 catalysts.

Clean Harbors' Q3 Earnings Miss Estimates

Clean Harbors reported mixed third-quarter 2024 results, wherein earnings missed the Zacks Consensus Estimate while revenues beat the same.

CLH’s earnings of $2.1 per share lagged the Zacks Consensus Estimate by 1.4% but increased 26.2% from the year-ago quarter’s actual. Total revenues of $1.5 billion surpassed the consensus estimate by 1.3% and increased 12% on a year-over-year basis.

CLH's Segmental Revenues

Environmental Services’ (ES) revenues of $1.3 billion grew 13.2% from the year-ago quarter, meeting our estimate. Strong demand for disposal and recycling services due to record volumes of containerized waste and positive pricing momentum has driven this segment’s revenues.

Revenues from Safety-Kleen Sustainability Solutions (SKSS) amounted to $232.1 million, increasing 5.9% on a year-over-year basis and beating our estimate of $230.9 million.

Clean Harbor's Profitability Performance

Adjusted EBITDA of $301.8 million grew 18.4% from the year-ago quarter and missed our projection of $303.6 million. The adjusted EBITDA margin was 19.7%, up 100 basis points from the year-ago quarter. Strength in the ES segment is expected to have driven the margin

Segment-wise, adjusted EBITDA for ES amounted to $332.5 million, increasing 15.1% year over year. The figure missed our estimate of $339.5 million. Adjusted EBITDA for SKSS was $41.2 million, up 32.4% from the year-ago quarter and outpacing our estimate of $44.9 million.

Balance Sheet & Cash Flow of CLH

Clean Harbors exited the quarter with cash and cash equivalents of $513.4 compared with $402 million at the end of the preceding quarter. Inventories and supplies were $376.6 million compared with $365.4 million in the second quarter of 2024.

Long-term debt (less current portion) was $2.8 billion, flat with the previous quarter. CLH generated $239.2 million in net cash from operating activities. The capital expenditure amounted to $96.8 million. The adjusted free cash flow utilized was $144.5 million.

CLH's 2024 Guidance

For 2024, Clean Harbors’ guidance for adjusted EBITDA was lowered to $1.100-$1.120 billion compared with the $1.125-$1.165 billion given in the previous quarter. The adjusted free cash flow guidance was reduced to $280-$320 million from the $350-$390 million provided in the preceding quarter. CapEx is projected to be $410-$440 million.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -23.57% due to these changes.

VGM Scores

At this time, Clean Harbors has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, 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

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Clean Harbors has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Clean Harbors is part of the Zacks Waste Removal Services industry. Over the past month, Waste Management (WM - Free Report) , a stock from the same industry, has gained 5.8%. The company reported its results for the quarter ended September 2024 more than a month ago.

Waste Management reported revenues of $5.61 billion in the last reported quarter, representing a year-over-year change of +7.9%. EPS of $1.96 for the same period compares with $1.63 a year ago.

For the current quarter, Waste Management is expected to post earnings of $1.82 per share, indicating a change of +4.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Waste Management. Also, the stock has a VGM Score of B.


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