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Stock Strategist

Stericycle Sell-Off Overdone

We think the shares currently offer a significant margin of safety to investors.


We already expected that a hurricane-soaked quarter would weigh on wide-moat  Stericycle’s (SRCL) ability to maintain its 2017 earnings guidance, so the sell-off in the shares that followed the company’s third-quarter report, released after the close Nov. 8, appears largely overblown to us.

Stericycle finally announced its intention to move ahead with a comprehensive turnaround plan that will include restructuring and the implementation of an enterprise resource planning system. While it won’t reveal full details until early 2018, we’ve proactively tempered our expectations for near-term earnings to reflect the additional costs that such large-scale efforts typically require.

Barbara Noverini does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.