Clean Harbors, Inc. CLH stock has rallied 42% in the past year, significantly outperforming the 16% growth of the industry.
The company has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
The company’s 2024 and 2025 earnings are expected to increase 3.2% and 12.6%, respectively, year over year. Sales in 2024 and 2025 are expected to rise 8.8% and 5.7%, respectively.
Clean Harbors, Inc. Price
Clean Harbors, Inc. price | Clean Harbors, Inc. Quote
Key Growth Drivers of CLH
Growing industrial activity, stricter environmental laws and the rising importance of corporate sustainability are tailwinds for Clean Harbors' business growth. Since industries nowadays prioritize environmental compliance and waste management solutions, CLH’s expertise in hazardous waste disposal and environmental cleanup is highly sought in the manufacturing, healthcare and energy sectors. The company benefits from long-term service contracts, providing recurring revenues and stable cash flows. CLH’s revenues have increased at a compound annual growth rate (CAGR) of 9.7% from 2019 to fiscal 2023. Operating cash increased at a CAGR of 12.2% during this period.
CLH’s acquisition strategy enhances its service portfolio and geographical reach. Past acquisitions have successfully driven revenue and market share growth. The 2023 acquisition of Thompson Industrial Services expanded the Environmental Services segment's industrial service operations in the southeastern region of the United States. In 2022, Clean Harbors acquired two privately owned businesses. They strengthened the waste oil collection and re-refining operations of the Safety-Kleen Sustainability Solutions segment, expanding CLH’s presence in the southern United States.
CLH's solid cash reserves contribute to its strong liquidity. The current ratio at the end of the third quarter of 2024 was pegged at 2.1, higher than the industry average of 1. A current ratio of more than 1 often indicates that the company will be easily paying off its short-term obligations. The times interest earned ratio of 5.3X has been coming down over the past year but remains well above the industry’s 4.7X. So, there is no trouble servicing its debt.
Some Risks
CLH does not offer quarterly dividends as the company focuses on reinvesting profits into growth rather than returning them to shareholders. This means that the sole source of returns for its shareholders comes from capital appreciation. Investors seeking quarterly dividends should avoid buying CLH shares.
Zacks Rank and Stocks to Consider
Clean Harbors currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Zacks Business Services sector are ABM Industries ABM and Cintas CTAS, each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ABM Industries has a long-term earnings growth expectation of 5.2%. ABM delivered a trailing four-quarter earnings surprise of 11.6%, on average.
Cintas has a long-term earnings growth expectation of 12%. CTAS delivered a trailing four-quarter earnings surprise of 7.7%, on average.
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Cintas Corporation (CTAS) : Free Stock Analysis Report
ABM Industries Incorporated (ABM) : Free Stock Analysis Report
Clean Harbors, Inc. (CLH) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
