Stericycle vs. Waste Management: Assessing the More Attractive Value Stock

For those invested in the Waste Removal Services sector, two noteworthy competitors are often considered: Stericycle (SRCL) and Waste Management (WM). Investors focused on maximizing their value are confronted with the decision of which stock represents a more enticing investment opportunity. Examining these stocks more closely is crucial to making a well-informed decision.

Understanding Value Investing Criteria

Value investing is not without its variety of strategies; however, one effective approach involves combining a strong Zacks Rank with an excellent score in the Value category within the Style Scores system. A high Zacks Rank indicates that a company is receiving positive adjustments to its earnings projections, while a good Value score suggests the stock is undervalued relative to the market.

At present, Stericycle boasts a Zacks Rank of #2 (Buy), signifying an optimistic trend in earnings estimates. Waste Management holds a Rank of #3 (Hold), which is also favorable but not as strong as a Buy rating. While SRCL shows potential in earnings forecasts, the full picture requires a deep dive into traditional valuation metrics.

Key Valuation Metrics Comparison

Value investors often rely on metrics like the P/E ratio, P/S ratio, earnings yield, and cash flow per share. SRCL's forward P/E ratio currently stands at 22.79, which is lower than WM's at 30.79, indicating SRCL might be the more undervalued of the two at its current price. Stericycle also possesses a PEG ratio—a measure factoring in expected earnings growth—of 2.85, compared to WM's ratio of 3.22.

An additional valuation point is the P/B ratio that compares a stock's market value to its book value. Here, SRCL's P/B ratio is 1.93, substantially lower than WM's which is 12.37, suggesting again that Stericycle's stock might be more reasonably priced in the market.

When considering these indicators, Stericycle emerges with a Value grade of B, while Waste Management is awarded a grade of C. Based on the combination of Zacks Rank and Style Scores, Stericycle may be the more attractive choice for value investors at this time.

Stericycle, WasteManagement, ValueStock