Clean Harbors Inc Valuation – Initial Coverage $CLH

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Stocks for Using A Benjamin Graham Value Investing Strategy – December 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Clean Harbors Inc (CLH) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Clean Harbors, Inc. is a provider of environmental, energy and industrial services. The Company operates in six segments: Technical Services; Industrial and Field Services; Kleen Performance Products; SK Environmental Services; Lodging Services, and Oil and Gas Field Services. Its Technical Services segment involves the collection, transportation, treatment and disposal of hazardous and non-hazardous wastes. Its Industrial services segment offers industrial maintenance services and industrial services. Its Kleen Performance Products segment processes used oil to convert into a range of products. SK Environmental Services segment offers environmental services and complementary products. Lodging Services consists of four lines of businesses: Lodge Operations, Mobile Camp Operations, Hospitality Operations and Manufacturing. Oil and Gas Field Services segment provides fluid handling, fluid hauling, production servicing, surface rentals, seismic services and directional boring services.

CLH Chart

CLH data by YCharts

To read the details of this valuation, you must be logged in as a premium member. If you are not a premium member, please consider becoming one.

Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Recent valuations of the components of the Dow Jones Industrial Average are available for free members, including this one of Microsoft Corporation.  In addition, here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of CLH – January 2017

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass 6 out of the following 7 tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $3,248,466,489 Pass
2. Sufficiently Strong Financial Condition Current Ratio > 2 1.95 Fail
3. Earnings Stability Positive EPS for 10 years prior Fail
4. Dividend Record Dividend Payments for 10 years prior Fail
5. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end -105.88% Fail
6. Moderate PEmg Ratio PEmg < 20 175.52 Fail
7. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 2.94 Fail
Enterprising Investor; must pass 4 out of the following 5 tests, or be suitable for the Defensive Investor.
1. Sufficiently Strong Financial Condition Current Ratio > 1.5 1.95 Pass
2. Sufficiently Strong Financial Condition Debt to NCA < 1.1 3.20 Fail
3. Earnings Stability Positive EPS for 5 years prior Fail
4. Dividend Record Currently Pays Dividend Fail
5. Earnings Growth EPSmg greater than 5 years ago Fail

Stage 2: Determination of Intrinsic Value

EPSmg $0.32
MG Growth Estimate -4.25%
MG Value $0.00
Opinion Overvalued
MG Grade F
MG Value based on 3% Growth $4.66
MG Value based on 0% Growth $2.73
Market Implied Growth Rate 83.51%
Current Price $56.40
% of Intrinsic Value N/A

Clean Harbors Inc does not satisfy the requirements of either the Enterprising Investor or the more conservative Defensive Investor. The Defensive Investor is concerned with the low current ratio, insufficient earnings stability or growth over the last ten years, the poor dividend history, and the high PEmg and PB ratios. The Enterprising Investor has concerns regarding the level of debt relative to the net current assets, and the lack of earnings stability or growth over the last five years, and the lack of dividends. As a result, all value investors following the ModernGraham approach should explore other opportunities at this time or proceed cautiously with a speculative attitude.

As for a valuation, the company appears to be Overvalued after seeing its EPSmg (normalized earnings) decline from $2.11 in 2012 to an estimated $0.32 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 83.51% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on the Benjamin Graham value investing formula, returns an estimate of intrinsic value below the price.

At the time of valuation, further research into Clean Harbors Inc revealed the company was trading above its Graham Number of $0. The company does not pay a dividend. Its PEmg (price over earnings per share – ModernGraham) was 175.52, which was above the industry average of 29.32. Finally, the company was trading above its Net Current Asset Value (NCAV) of $-27.17.

Clean Harbors Inc scores quite poorly in the ModernGraham grading system, with an overall grade of F.

Stage 3: Information for Further Research

Net Current Asset Value (NCAV) -$27.17
Graham Number $0.00
PEmg 175.52
Current Ratio 1.95
PB Ratio 2.94
Current Dividend $0.00
Dividend Yield 0.00%
Number of Consecutive Years of Dividend Growth 0


Useful Links:

ModernGraham tagged articles Morningstar
Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information 9/1/2016
Total Current Assets $1,049,931,000
Total Current Liabilities $539,096,000
Long-Term Debt $1,632,577,000
Total Assets $3,712,613,000
Intangible Assets $977,970,000
Total Liabilities $2,611,668,000
Shares Outstanding (Diluted Average) 57,487,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate -$0.47
Dec2015 $0.76
Dec2014 -$0.47
Dec2013 $1.57
Dec2012 $2.40
Dec2011 $2.39
Dec2010 $2.47
Dec2009 $0.74
Dec2008 $1.26
Dec2007 $1.07
Dec2006 $1.13
Dec2005 $0.73
Dec2004 -$0.33
Dec2003 -$0.76
Dec2002 -$1.21
Dec2001 $0.20
Dec2000 $0.32
Dec1999 -$0.13
Dec1998 -$0.19
Dec1997 -$0.71
Dec1996 -$0.39

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $0.32
Dec2015 $0.92
Dec2014 $1.23
Dec2013 $2.02
Dec2012 $2.11
Dec2011 $1.84
Dec2010 $1.49
Dec2009 $0.99
Dec2008 $1.00
Dec2007 $0.71
Dec2006 $0.32
Dec2005 -$0.15
Dec2004 -$0.51
Dec2003 -$0.50
Dec2002 -$0.32
Dec2001 $0.05
Dec2000 -$0.09

Recommended Reading:

Other ModernGraham posts about the company

None. This is the first time ModernGraham has covered the company.

Other ModernGraham posts about related companies

Waste Management Inc Valuation – August 2016 $WM
Stericycle Inc. Analysis – October 2015 Update $SRCL
Republic Services Inc. Analysis – September 2015 Update $RSG
Waste Management Inc. Analysis – 2015 Update $WM
Stericycle Inc. Annual Stock Valuation – 2014 $SRCL
Republic Services Inc. Annual Stock Valuation – September 2014 $RSG


The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.