Clean Harbors (CLH) Margin Miss Raises Questions for Bullish Narratives on Growth and Value

Clean Harbors (CLH) posted a net profit margin of 6.5%, marking a slip from last year's margin of 7.2%. Over the last five years, the company grew its earnings at an annual rate of 18.9%, but this past year saw negative earnings growth compared to that trend. Earnings are expected to increase at 9.9% per year, which lags behind broader US market projections of 15.9% earnings growth and 10.3% revenue growth. With a price-to-earnings ratio of 29x, sitting above the industry average but below peers, and analyst fair value estimates implying upside from the current $210.51 share price, Clean Harbors presents a mix of profit growth signals and valuation debate amid margin pressures.

See our full analysis for Clean Harbors.

Now it's time to put those numbers in context. In the next section, we'll see how these results stack up against the most widely held narratives on Clean Harbors, where the numbers reinforce the story, and where they call it into question.

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Margin Expansion Projected to 8.6%

• Analysts project Clean Harbors’ profit margins will widen from 6.5% today to 8.6% over the next three years. This signals an expected lift in core profitability, even as headline margins declined this year.
• The consensus view among analysts ties this margin recovery to several structural drivers:
  • Investments in new facilities and logistics technology are expected to improve route density and operating leverage, helping to counteract recent margin pressures.
  • The company’s established role in PFAS destruction positions it to capture increased revenue and margin growth as regulation increases.
• The consensus narrative notes that this margin outlook surpasses Clean Harbors’ own five-year average trend, but trails industry peers who benefit from both higher starting margins and sector-wide tailwinds.
  • In comparison to the broader US market, where earnings are forecast to grow by 15.9% a year, Clean Harbors’ 9.9% forecast may temper more bullish expectations.
  Investors are watching whether operational upgrades will happen quickly enough to meet consensus expectations. See how the consensus narrative frames this turning point in the next section. 📊 Read the full Clean Harbors Consensus Narrative.

Analysts See Shares 45% Below DCF Fair Value

• At a current price of $210.51, shares trade well below the DCF fair value estimate of $305.61. This suggests a potential 45% upside if Clean Harbors delivers on profit and cash flow projections.
• The consensus view among analysts considers this valuation gap a reward for patient investors but emphasizes several caveats:
  • To justify fair value, Clean Harbors must achieve $605.1 million in earnings by 2028 and maintain an above-industry price-to-earnings multiple. Both of these depend on sustaining operational gains.
  • With analysts split between a high of $305.0 and a low of $240.0 for price targets, there is notable disagreement about the likelihood of reaching these ambitious benchmarks.

Capital Needs and Regulatory Headwinds Loom

• Despite strong valuation signals, Clean Harbors' ongoing requirement for sizable capital investments and rising regulatory costs remain pressing concerns. Increased capex and compliance expenses could pressure free cash flow if top-line growth falls short.
• The consensus view among analysts emphasizes the importance of balancing investment for growth with risk management:
  • Management’s focus on new facility rollouts and advanced technology aims to unlock long-term value. Execution risk remains, however, if regulatory or technology changes reduce demand for key services such as hazardous waste incineration.
  • Persistent sector risks, including regulatory scrutiny and alternative disposal technologies, could dampen the recurring earnings expected from Clean Harbors’ legacy business lines.

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Clean Harbors on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Clean Harbors research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Clean Harbors faces challenges with margin pressures, ongoing capital needs, and regulatory headwinds. These factors make consistent, reliable growth harder to achieve than peers.

If you want steady performers with fewer growth question marks, focus on stable growth stocks screener (2101 results) delivering consistent expansion and resilience through changing markets.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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