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Clean Harbors (CLH) Stock Down 11.5% in 3 Months: Here's Why

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Clean Harbors, Inc.’s (CLH - Free Report) shares have lost 11.5% compared with its industry’s loss of 2.5%, in the past three months.

 

Reasons Behind the Price Plunge

Fuel Price Fluctuations

Volatility in fuel prices and new policies are rapidly transforming the American energy sector, while escalating tensions in the Middle East are clouding the global oil picture. The company’s exploration, drilling activity and production are largely dependent upon the operation of oil rigs, as well as global and North American oil prices. Volatility in oil prices and future price uncertainties have resulted in lower activity levels that are negatively impacting the business' results.

Seasonal Fluctuations

Clean Harbors’ demand cycle is highly dependent on the changing seasons. The company witnesses a decreasing demand for environmental services in the first quarter owing to frigid weather, mainly in the Northern and Midwestern United States, and Canada. As a result, reduction in volumes of waste and higher operating costs associated with functioning in sub-zero temperatures with high levels of snowfall, impair the smooth functioning of the business.

Additionally, certain services’ demand also varies with their easy accessibility, depending on the seasons. The seasonal variations reduce the predictability of income and weighs on the company’s earnings.

Downward Estimate Revisions & Zacks Rank

The expected dismal performance in the first quarter seems to a major reason behind the price plunge and is further aggravated by downward estimate revisions.  Although the Zacks Consensus Estimate for the quarter’s earnings stayed flat at a loss of 14 cents per share, over the past 60 days, the same for 2018 decreased 22%.

The downward estimate revisions along with a bearish Zacks Rank #4 (Sell) reflect pessimism over prospects of Clean Harbors.

Negative Earnings Surprise History

Clean Harbors has a disappointing earnings surprise history. The company’s earnings have lagged the Zacks Consensus Estimate in all of the previous four quarters, delivering an average negative earnings surprise of 35.7%.

Stocks to Consider

Some better-ranked stocks in the broader Business Services sector include Waste Management (WM - Free Report) , US Ecology (ECOL - Free Report) and Kforce (KFRC - Free Report) . Waste Management and Kforce carry a Zacks Rank #2 (Buy), while US Ecology sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Sales for Waste Management, US Ecology and Kforce are estimated to rise 3.8%, 3.9% and 3.4%, respectively, for the current quarter.

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