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What: Shares of Stericycle
So what: And yet, Stericycle grew its revenues more than 25%. Is it too much to ask that Stericycle post profit gains in line with revenue growth?
Now what: Perhaps it is. Rather than focus on short-term, quarter-long performance (or for that matter, to trust that gains which appear in the first minutes of post-earnings trading will hold firm), let's take a step back and consider Stericycle's full-year performance. Because as it turns out, that was pretty good indeed.
For full-year fiscal 2010, Stericycle posted 22% growth in revenues, and an almost-as-robust 18% rise in profits. The company cleaned up in the cash-profits department as well, producing free cash flow for the year of $277.5 million. Meanwhile, the company's strong 26% operating profit margin continues to outclass fellow trash-gatherers Waste Management
On the other hand, Stericycle also costs a whole lot more than the competition. Probably more than it's worth even at an 18% growth rate. My guess? That's why the 11% post-earnings pop in stock price didn't last.
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Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. The Fool owns shares of Waste Management. Also, Waste Management is a Motley Fool Inside Value choice, Stericycle is a Motley Fool Rule Breakers recommendation, and both Republic Services and Waste Management are Motley Fool Income Investor recommendations. The Motley Fool has a disclosure policy.
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