Will Stericycle (SRCL) Beat Q1 Earnings on Organic Growth? - Analyst Blog

Stericycle, IncSRCL is scheduled to report its first-quarter 2015 results after the market closes on Apr 23. In the last reported quarter, quarterly earnings were in line with the Zacks Consensus Estimate. Let's see how things are shaping up for this announcement.

Key Factors in the First Quarter

Stericycle is continuously on the lookout for strategic acquisitions that will enhance market share and expand its geographic base. The acquisition pool of the company remains robust in multiple geographies and lines of business.

International growth rates are expected to accelerate due to increasing customer adoption of multiple services and expansion into new lines of business. The global acquisition strategy increases Stericycle's customer base, by providing a long-term growth platform for selling multiple services. Whether the customer is a large hospital system or a retail chain, Stericycle provides multiple services to help them improve their operations and achieve their goals. As customers adopt these multiple services, they can almost raise their revenues by threefold in the long run.

However, in the business of medical waste disposal, new regulations can be frequently adopted. Changing regulations would impose new compliance requirements on Stericycle, alter its current method of conducting business, and ultimately increase costs and compress margins.

Earnings Whispers

Our proven model does not conclusively show that Stericycle will beat earnings estimates in this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) for this to happen. This is not the case here as you will see below.

Zacks ESP : Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at 0.00%. This is because both the Most Accurate estimate and Zacks Consensus Estimate currently stand at $1.10.

Zacks Rank : Stericycle's Zacks Rank #3, when combined with a 0.00% ESP, makes surprise prediction difficult. Note that stocks with Zacks Rank #1, #2 and #3 coupled with a positive ESP have a significantly higher chance of beating earnings.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Popular, Inc. BPOP , earnings ESP of +9.86% and Zacks Rank #1.

Apple Inc. AAPL , earnings ESP of +1.38% and Zacks Rank #2.

Huntington Ingalls Industries, Inc. HII , earnings ESP of +2.91% and Zacks Rank #2.

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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.

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

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