Clean Harbors trades at $311.57 and has moved in lockstep with the market. Its shares have returned 16.7% over the last six months while the S&P 500 has gained 13.5%.
Is now a good time to buy CLH? Find out in our full research report, it’s free.
Why Does CLH Stock Spark Debate?
Established in 1980, Clean Harbors (NYSE: CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.
Two Positive Attributes:
1. Skyrocketing Revenue Shows Strong Momentum
A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Clean Harbors grew its sales at an exceptional 13.5% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers.
2. Increasing Free Cash Flow Margin Juices Financials
Free cash flow isn’t a prominently featured metric in company financials and earnings releases, but we think it’s telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
As you can see below, Clean Harbors’s margin expanded by 5.9 percentage points over the last five years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability. Clean Harbors’s free cash flow margin for the trailing 12 months was 8.8%.
One Reason to Be Careful:
Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Clean Harbors’s revenue to rise by 7.3%. While this projection suggests its newer products and services will spur better top-line performance, it is still below average for the sector. At least the company is tracking well in other measures of financial health.
Final Judgment
Clean Harbors has huge potential even though it has some open questions. At $311.57 per share (or 30.9× forward P/E), is now the time to initiate a position? See for yourself in our comprehensive research report, it’s free.
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