The stock continues to climb following yesterday's announcement that it had entered a stock purchase agreement to acquire The Environmental Quality Company. The $465 million deal is expected to close later this year.
"The addition of EQ to US Ecology's family of permitted facilities will provide us with an expanded environmental services platform, broadening our geographic footprint and providing for a greater array of services to better meet the needs of our customers," said Jeff Feeler, President and CEO.
Wells Fargo (WFC) upgraded US Ecology to "outperform" while raising the company's price target to $42-$44. Keybanc also upgraded US Ecology shares to "buy" from "hold" with a price target of $42 following the acquisition announcement.
Separately, TheStreet Ratings team rates US ECOLOGY INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate US ECOLOGY INC (ECOL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, expanding profit margins, good cash flow from operations and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 7.1%. Since the same quarter one year prior, revenues rose by 17.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ECOL has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.16, which clearly demonstrates the ability to cover short-term cash needs.
- Powered by its strong earnings growth of 45.45% and other important driving factors, this stock has surged by 44.32% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, ECOL should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- 46.77% is the gross profit margin for US ECOLOGY INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.51% significantly outperformed against the industry average.
- Net operating cash flow has significantly increased by 68.86% to $17.46 million when compared to the same quarter last year. In addition, US ECOLOGY INC has also vastly surpassed the industry average cash flow growth rate of 5.65%.
- You can view the full analysis from the report here: ECOL Ratings Report