Clean Harbors, Inc. (CLH - Get Rating) in Norwell, Mass., provides environmental and industrial services in North America. The stock has declined 15.9% in price over the past month to close yesterday’s trading session at $89.24. In addition, it is currently trading 24.7% below its 52-week high of $118.48, which it hit on Nov. 3, 2021. 

However, the company recently reported impressive fiscal first-quarter results, beating Wall Street estimates.

CLH’s revenue and adjusted EPS for the quarter beat estimates by 10.5% and 31.7%, respectively. CLH has also raised its 2022 adjusted EBITDA guidance range to $800 – $830 million from the $765 – $795 million range. Moreover, U.S. regulations, infrastructure spending, chemical manufacturing, and reshoring of multiple industries make the stock’s near-term prospects look bright.

Here is what I think could influence CLH’s performance in the upcoming months:

Robust Financials

CLH’s revenue has increased 45% year-over-year to $1.17 billion in the first quarter, which ended March 31, 2022. The company’s adjusted EBITDA grew 39% year-over-year to $180.30 million, while its adjusted net income came in at $45.40 million, representing a 94% year-over-year increase. Also, its adjusted EPS was $0.83, up 97.6% year-over-year.

Favorable Analyst Estimates

For the quarter ending June 30, 2022, analysts expect CLH’s EPS and revenue to grow 23.5% and 45%, respectively, year-over-year to $1.47 and $1.22 billion. In addition, its EPS is expected to grow 30% per annum over the next five years. Also, Wall Street analysts expect the stock to hit $123.10 in the near term, indicating a potential upside of 37.9%.

High Profitability

In terms of trailing-12-month CAPEX/Sales, CLH’s 6.49% is 136.4% higher than the 2.74% industry average. And its 16.23% trailing-12-month EBITDA margin is 22.1% higher than the 13.30% industry average. Moreover, the stock’s 15.42% and 0.84%  respective trailing-12-month ROCE and asset turnover ratio are higher than the 14.48% and 0.80% industry averages.

Discounted Valuation

In terms of forward P/S, CLH’s 1.04x is 16.2% lower than the 1.24x industry average. And its  8.87x forward EV/EBITDA is 12.7% lower than 10.16x the industry average. The  stock’s 1.53x forward EV/S is lower than the 1.57x industry average.

POWR Ratings Show Promise

CLH has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. Among  these categories, CLH has a B grade for Value, which is in sync with its lower-than-industry valuation ratios.

CLH also has a B grade for Growth and Sentiment, consistent with its revenue and earnings growth estimates.

Beyond what I have stated above, we have also given CLH grades for Quality, Stability, and Momentum. Get all the CLH ratings here.

CLH is ranked #5 out of 15 stocks in the B-rated Waste Disposal industry.

Bottom Line

CLH reported impressive fiscal first-quarter results despite supply and inflation challenges. It is well-positioned to benefit from its robust pipeline of waste project opportunities. So, we think it could be wise to buy the dip in the stock.

How Does Clean Harbors (CLH) Stack Up Against its Peers?

CLH has an overall POWR Rating of B. One could also check out these other stocks within the Waste Disposal industry with an A (Strong Buy) rating: Waste Management Inc. (WM - Get Rating), Republic Services Inc. (RSG - Get Rating), and Heritage-Crystal Clean, Inc. (HCCI - Get Rating).

CLH shares were trading at $89.70 per share on Wednesday morning, up $0.46 (+0.52%). Year-to-date, CLH has declined -10.09%, versus a -16.40% rise in the benchmark S&P 500 index during the same period.

About the Author: Nimesh Jaiswal

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...

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