Clean Harbors (CLH)

Environmental and industrial services company Clean Harbors (NYSE:CLH) missed Wall Street’s revenue expectations in Q3 CY2025 as sales only rose 1.3% year on year to $1.55 billion. Its GAAP profit of $2.21 per share was 7.8% below analysts’ consensus estimates.

Company Overview

Established in 1980, Clean Harbors (NYSE:CLH) provides environmental and industrial services like hazardous and non-hazardous waste disposal and emergency spill cleanups.

Waste management companies can possess licenses permitting them to handle hazardous materials. Furthermore, many services are performed through contracts and statutorily mandated, non-discretionary, or recurring, leading to more predictable revenue streams. However, regulation can be a headwind, rendering existing services obsolete or forcing companies to invest precious capital to comply with new, more environmentally-friendly rules. Lastly, waste management companies are at the whim of economic cycles. Interest rates, for example, can greatly impact industrial production or commercial projects that create waste and byproducts.

Top competitors against Clean Harbors in the environmental services industry include Waste Management (NYSE:WM), Republic Services (NYSE:RSG), and Velia Environnement (EPA:VIE).

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Clean Harbors grew its sales at an excellent 13.1% compounded annual growth rate. Its growth beat the average industrials company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Clean Harbors’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 5.6% over the last two years was well below its five-year trend.

This quarter, Clean Harbors’s revenue grew by 1.3% year on year to $1.55 billion, falling short of Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 5.2% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not accelerate its top-line performance yet.

At StockStory, we prefer high gross margin businesses because they indicate the company has pricing power or differentiated products, giving it a chance to generate higher operating profits.

Clean Harbors’s unit economics are better than the typical industrials business, signaling its products are somewhat differentiated through quality or brand. As you can see below, it averaged a decent 31.2% gross margin over the last five years. Said differently, Clean Harbors paid its suppliers $68.84 for every $100 in revenue.

Clean Harbors produced a 32.3% gross profit margin in Q3, marking a 1.3 percentage point increase from 31% in the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting its input costs (such as raw materials and manufacturing expenses) have been stable and it isn’t under pressure to lower prices.

Clean Harbors has managed its cost base well over the last five years. It demonstrated solid profitability for an industrials business, producing an average operating margin of 11.1%.

Looking at the trend in its profitability, Clean Harbors’s operating margin rose by 1.5 percentage points over the last five years, as its sales growth gave it operating leverage. Its expansion was impressive, especially when considering most Waste Management peers saw their margins plummet.

This quarter, Clean Harbors generated an operating margin profit margin of 12.5%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Clean Harbors’s EPS grew at an astounding 27.5% compounded annual growth rate over the last five years, higher than its 13.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into Clean Harbors’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Clean Harbors’s operating margin was flat this quarter but expanded by 1.5 percentage points over the last five years. On top of that, its share count shrank by 3.6%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Clean Harbors, its two-year annual EPS growth of 4.1% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q3, Clean Harbors reported EPS of $2.21, up from $2.12 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Clean Harbors’s full-year EPS of $7.21 to grow 15.9%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Clean Harbors has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 6.2% over the last five years, slightly better than the broader industrials sector.

Clean Harbors’s free cash flow clocked in at $207.5 million in Q3, equivalent to a 13.4% margin. This result was good as its margin was 3.9 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Clean Harbors’s management team makes decent investment decisions and generates value for shareholders. Its five-year average ROIC was 11.4%, slightly better than typical industrials business.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Uneventfully, Clean Harbors’s ROIC has stayed the same over the last few years. Given the company’s underwhelming financial performance in other areas, we’d like to see its returns improve before recommending the stock.

Clean Harbors reported $850.4 million of cash and $3.02 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.15 billion of EBITDA over the last 12 months, we view Clean Harbors’s 1.9× net-debt-to-EBITDA ratio as safe. We also see its $143.1 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We struggled to find many positives in these results. Its EPS missed and its revenue fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 6.2% to $230.93 immediately after reporting.

Updated: December 3, 2025 at 10:16 PM EST

Before investing in or passing on Clean Harbors, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

Clean Harbors has some positive attributes, but it isn’t one of our picks. First off, its revenue growth was impressive over the last five years. And while Clean Harbors’s organic revenue growth has disappointed, its astounding EPS growth over the last five years shows its profits are trickling down to shareholders.

Clean Harbors’s P/E ratio based on the next 12 months is 30.6x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $250.33 on the company (compared to the current share price of $237.01).