Please ensure Javascript is enabled for purposes of website accessibility

Why Stericycle Stock Is Sinking Today

By Matthew DiLallo - Feb 22, 2018 at 1:36PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The medical waste disposal and secure information destruction company missed analysts' expectations for earnings due to higher costs.

What happened

Shares of Stericycle Inc (SRCL -2.93%) are slumping today, down 17% as of 12:30 p.m. EST, after the company announced lackluster fourth-quarter results.

So what

Stericycle reported $887.8 million in revenue during the quarter, which came in a bit higher than expected and helped push full-year sales to $3.58 billion, up 0.5% from last year and toward the upper end of its $3.54 billion-$3.6 billion guidance range. Profits, however, missed the mark. Overall, adjusted earnings came in at $1.00 per share, which was flat with 2016 and $0.14 below the consensus estimate. As a result, full-year earnings were just $4.34 per share, which was 4.2% below last year's result and less than the company's guidance for $4.46 to $4.52 per share.

Falling stock chart superimposed over digital map of the globe

Image source: Getty Images.

The main issue was a big spike in selling, general, and administrative expenses, which ballooned 23% to $367 million during the quarter. That said, Stericycle did unveil a plan to turn around its sinking profitability, which includes selling non-strategic assets, optimizing its operations, improving efficiency, and leveraging its scale. The company believes this transformation will drive 6% to 10% compound annual growth in adjusted earnings per share through 2022 and 10% to 14% compound annual growth in free cash flow over that time frame.

Now what

Stericycle has been stuck in a rut for quite some time due to in part to headwinds in its manufacturing and industrial services business. However, it has a plan to get out of this rough patch by undertaking a comprehensive strategy to reaccelerate growth and profitability. The company fully believes that this plan will begin paying off this year, estimating that it can grow earnings 7% even though it expects revenue to dip.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Stericycle, Inc. Stock Quote
Stericycle, Inc.
$43.07 (-2.93%) $-1.30

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.