CLH

We rate CLEAN HARBORS INC (CLH) as a Buy with a composite score of 65.8/100 at a current price of $284.97. The stock scores above average across the majority of our six quantitative factors and ranks #255 out of 7,333 stocks in our universe, reflecting a favorable risk-reward profile.

The rating is primarily driven by strength in stability (90th percentile) and momentum (80th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Narrow Moat rating (54/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; balance sheet deleveraging progress. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

CLEAN HARBORS INC holds a mid-tier position (#26 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 65.8/100 places it at rank #255 in our full 7,333-stock universe. With a $12.5B market capitalization, CLEAN HARBORS INC operates at meaningful scale within the Services sector, providing competitive advantages in distribution, procurement, and customer reach.

Despite positive momentum (80th percentile), revenue contraction of -0% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 31% (-28.3pp vs sector) narrow to operating margins of 12% (+8.1pp vs sector) and net margins of 6.9%, yielding a gross-to-net conversion rate of 22%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $284.97, CLEAN HARBORS INC is trading near fair value based on current fundamentals. Our value factor score of 66/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 36.3x (a 53% premium to the sector median of 23.7x), EV/EBITDA of 18.4x (at a premium), P/B of 5.5x, P/S of 2.5x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a Medium uncertainty rating to CLEAN HARBORS INC. The stock presents a balanced risk profile: significant leverage (178% debt-to-equity). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: significant leverage (178% debt-to-equity). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 90th percentile and quality factor at the 52th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (90th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate CLEAN HARBORS INC's capital allocation as Poor. Key concerns include elevated leverage (178% D/E). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — CLEAN HARBORS INC significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, CLEAN HARBORS INC receives a Buy rating with a composite score of 65.8/100 (rank #255 of 7,333). Our quantitative framework assigns a Narrow Moat (54/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 67/100.

Our analysis supports a constructive view on CLEAN HARBORS INC. The combination of identifiable competitive advantages, medium uncertainty, and poor capital allocation creates a risk-reward profile that favors accumulation at current levels. We recommend investors consider adding this name to portfolios aligned with the stock's risk profile.