Quantcast

Why Should You Hold Stericycle Stock In Your Portfolio?


Shutterstock photo

Stericycle, Inc.SRCL is benefitting from focus on improving solution offerings and platforms, which is aiding the company to grow organically.

With expected long-term earnings per share (EPS) growth rate of 9.1% and a market cap of $4.7 billion, Stericycle is a stock that investors should retain in their portfolio now.

Let's take a look at the factors that bode well for the company.

Strategic Acquisitions

Stericycle continues to grow on the back of acquisitions in the domestic and international markets. A global acquisition strategy boosts the company's customer base by providing a long-term growth platform for offering multiple services.

In the first half of 2018, Stericycle completed 15 acquisitions, which contributed $15.2 million to top-line growth. In 2017 and 2016, Stericycle completed 30 and 31 acquisitions, respectively.  Further, acquisitions contributed $570.1 million and $32.2 million to 2016 and 2017 revenues, respectively.

Consistent Efforts to Develop Internally

Stericycle's efforts toward internal development bode well. The company is improving solution offerings and platforms to meet customer demands more effectively. This has enabled Stericycle build a strong and loyal customer base, having a revenue retention rate of nearly 90%.

The company is trying to grow by selling additional services to the existing ones as well as attract new customers on the back of strong client relationships.

Stericycle, Inc. Price and Consensus

Stericycle, Inc. Price and Consensus | Stericycle, Inc. Quote



Focus on Regulated Business-to-Business Services

Stericycle provides assistance to customers and businesses to comply with the tough regulatory policies. It mainly focuses on smaller businesses with high demand for regulatory assistance compared with larger businesses, due to the lack of specialized staff. To this end, the company is offering services, depending on varying customer needs.

We believe that this business strategy will help the company earn profits as well as expand into additional service offerings like hazardous or pharmaceutical waste management, communication services as well as secure information destruction.

Wrapping Up

In spite of significant growth prospects, Stericycle is not free from headwinds. The company is susceptible to pricing pressure due to intense competition. It has a debt-laden balance sheet that may limit future expansion and worsen risk profile. However, we believe that internal growth, strategic acquisitions and strong customer base bode well for Stericycle in the long term.

Zacks Rank & Stocks to Consider

Currently, Stericycle carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

A few better-ranked stocks in the broader Business Services Sector include ICF International, Inc. ICFI , Information Services Group, Inc. III and Paychex, Inc. PAYX , each carrying a Zacks Rank #2 (Buy).

The long-term expected EPS (three to five years) growth rate for ICF International, Information Services and Paychex is 10%, 14%, and 8.4%, respectively.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Information Services Group, Inc. (III): Free Stock Analysis Report

Paychex, Inc. (PAYX): Free Stock Analysis Report

ICF International, Inc. (ICFI): Free Stock Analysis Report

Stericycle, Inc. (SRCL): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Stocks
Referenced Symbols: III , PAYX , ICFI , SRCL



More from Zacks.com

Subscribe






Zacks.com
Contributor:

Zacks.com

Equity Research










Research Brokers before you trade

Want to trade FX?