The Razor's Edge
2-Year Price History
Recent Price
(12/3/2008)
$53.19
52-Week Price
$46.45 - $66.15
Market Capitalization
$4.6 Billion
Most Recent Dividend
$0.00
About Stericycle, Inc.
Stericycle, Incorporated is considered to operate in the Industrial Goods
sector. They specifically operate in the Waste Management
business segment contained within the Materials & Construction industry.
The Company is engaged in the business of providing medical waste management services and regulated return management services in the United States, Canada, Mexico, the United Kingdom, Ireland and Argentina.
Ockham's Rating
Rating Specific Information Withheld
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SRCL Revenue
As we have often noted, in our valuation methodology, "Cash is King." Well, it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, SRCL the high and low end of the Price to Sales per share ratios are 4.82x and 3.19x respectively.
Notice that SRCL's current Price to Sales per share ratio is 4.29x, which is above its historical average only slightly. So, while not a major concern it is worth noting that from a value perspective SRCL does not look undervalued on a Price to Sales basis. However, were the Price to Sales ratio to drop by 7% (the historical average) then we would become more positive on this stock.
SRCL Cash Earnings
As a value investment framework, Ockham Research is similar to a private equity firm in terms of our valuation methods. We are always on the lookout for value in the form of sales and cash numbers. In the case of SRCL, Ockham views their current Cash Earnings as below their historical average multiples of Cash Earnings, as calculated by our proprietary analysis. It is incredibly important to understand that for SRCL, the current level of Cash Earnings compared to its historical levels helps identify where SRCL is in relation to what the investing community was willing to pay for this level of Cash Earnings in the past. With a historical high Cash Earnings per share ratio of 29.07 and a historical low Cash Earnings per share ratio of 19.11, an investor can relate where value becomes optimal.
With a historical average Cash Earnings ratio of 24.09, the current Cash Earnings ratio of 23.48 is a positive opportunity for value in the Ockham view. Naturally, we would love to see a deeper value opportunity for SRCL, but to get there one of two things must occur (or both). Either the stock price must decline further to increase the long term buying opportunity, or the management at SRCL needs to earn more cash. If either, or both, of these occur, then we could see a significant gap emerge between what investors were willing to pay for in the past, and where SRCL is trading currently (latest close price of $57.30).
SRCL Dividends
A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely. While we do like to see companies with healthy and growing dividends, it is not appropriate for all companies, especially those focused on growth. We regard SRCL as neutral in terms of dividends because they have no history of paying a dividend and continue to reinvest that money for growth purposes.
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