NEW YORK (TheStreet) -- Clean Harbors
(CLH - Get Report) was downgraded to "hold" from "buy" at KeyBanc on Tuesday. Clean Harbors opened trading down 2.5% to $53.40.
Keybanc downgraded the environmental, energy and industrial services provider due to limited earnings visibility and the overselling of undervalued shares.
The firm also removed its $52 price target.
"We believe a HOLD rating is justified for the following reasons: our sum of the parts framework suggests the shares were oversold in the mid-$40s and now appear to more accurately reflect its core value in the mid-$50s; and recent execution has been choppy, and while significant downward estimate revisions likely discount these headwinds, we believe earnings visibility remains limited and we have low conviction in our current estimates" KeyBanc said in the note.
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- CLH's very impressive revenue growth greatly exceeded the industry average of 6.9%. Since the same quarter one year prior, revenues leaped by 57.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The debt-to-equity ratio is somewhat low, currently at 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.45, which illustrates the ability to avoid short-term cash problems.
- Net operating cash flow has increased to $135.73 million or 48.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.81%.
- CLEAN HARBORS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, CLEAN HARBORS INC reported lower earnings of $1.57 versus $2.38 in the prior year. This year, the market expects an improvement in earnings ($1.77 versus $1.57).
- You can view the full analysis from the report here: CLH Ratings Report