Is Stericycle Inc. (SRCL) A Risky Investment?

Stericycle Inc. (NASDAQ:SRCL) finished Friday with an addition of $0.25 to close at $69.95, an upside of 0.36 percent. An average of 212,780 shares of common stock have been traded in the last five days. There was a gain of $1.75 in the past week, and it reached a new high 6 times over the past 12 months. The last 20 days have seen an average of 293,075 shares traded, while the 50-day average volume stands at 378,516.

SRCL stock has increased by 1.55% in the last month. The company shares reached their 1-month lowest point of $66.05 on 10/06/21. With the stock rallying to its 52-week high on 05/21/21, shares of the company touched a low of $61.62 and a high of $79.97 in 52 weeks. It has reached a new high 11 times so far this year and achieved 0.89% or $0.62 in price. In spite of this, the price is down -12.53% from the 52-week high.

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Insider Transactions

103 days have passed since Stericycle Inc. (SRCL) last reported insider trading activity. White Stephen Cory, who is EVP & Chief Commercial Officer, most recently acquired $1,390 shares at $70.72 per share on Jul 12. In this transaction, the insider spent $98,301. EVP International, Ginnetti Daniel, disposed of 24,291 shares at a price of $76.09 on Jun 07. The insider now owns more than $1,848,369 worth of shares.

Valuation Metrics

Stericycle Inc. (SRCL) has a trailing price-to-earnings (P/E) ratio of 282.06, which compares with the 18.60 for the broader industry and 29.83 for the sector. In the last five years, Stericycle Inc.’s PE ratio has ranged between 300.83 and 20.34. The stock’s beta is 1.37. Other valuation ratios to consider include the trailing price-to-sales (P/S) ratio at 2.44, the price-to-book (PB) ratio at 2.58, and the price-to-cash flow ratio at 17.42.

The quick ratio of Stericycle Inc. for the three months ended June 29 was 0.80, and the current ratio was 0.80, indicating that the company is not able to meet its debt obligations. Further, the company has a long term debt to equity ratio of 0.64 and a total debt to equity ratio of 0.68 for the quarter ending June 29. Stericycle Inc.’s EBITDA margin for the year ending June 29 is 19.35%, while its operating margin for the same period stands at 5.80%. Its gross profit as reported stood at $1.05 billion compared to revenue of $2.68 billion.

For investors, determining the potential profitability of the investment also depends on the performance of the company’s management. In the past 12 months, Stericycle Inc.’s return on assets was 0.40%. For the broader industry, ROE averaged 4.15 over the past year.

Earnings Surprise

For the three-month period that ended June 29, Stericycle Inc. had $1.6 billion in total debt. In the quarter under review, the net income was up than the previous quarter. The company posted a net income of $29.3 million in the quarter, while revenues of $26.1 million were grew 115.36%. The analyst consensus anticipated Stericycle Inc.’s latest quarter earnings to come in at $0.69 per share, but it turned out to be $0.67, a -2.90% surprise. For the quarter, EBITDA amounted to $110.6 million. Shareholders own equity worth $91.85 million.

Technical Picture

From a technical analysis perspective, let’s take a brief look at Stericycle Inc. (SRCL) price momentum. RSI 9-day as of the close on 22 October was 67.48%, suggesting the stock is Neutral, with historical volatility in this time frame at 3.38%.

As of today, SRCL’s price is $69.22 +2.57% or $1.75 from its 5-day moving average. SRCL is currently trading +1.04% higher than its 20-day SMA and -10.55% lower than its 100-day SMA. However, the stock’s current price level is +4.57% above the SMA50 and -2.39% below the SMA200.

The stochastic %K and %D were 87.71% and 82.55%, respectively, and the average true range (ATR) was 1.30. With the 14-day stochastic at 80.25% and the average true range at 1.35, the RSI (14) stands at 59.98%. The stock has reached 0.93 on the 9-day MACD Oscillator while the 14-day reading was at 1.27.

Analyst Ratings

Berenberg launched coverage on Stericycle Inc. (NASDAQ: SRCL) in its analyst report released on October 15, 2020. The firm assigned the stock a a Buy rating. The consensus rating for Stericycle Inc. (SRCL) among analysts is Hold. According to current brokerage recommendations, 0 brokerage firms advise that investors sell SRCL, while 4 suggest investors hold. There are 3 analysts who rate the stock as underweight. The stock is rated overweight by 1 analysts, while 4 others rate it as a “buy”.

What is SRCL’s price target for the next 12 months?

Analysts predict a range of price targets between $61.00 and $95.00, with a median target of $82.00. Taking a look at these predictions, the average price target given by analysts for Stericycle Inc. (SRCL) stock is $78.86.


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