Investment Thesis
Clean Harbors exhibits severe fundamental deterioration masked by reported earnings. The company burns $92.1M in free cash flow while generating only $6.3M in operating cash flow on $1.5B revenue (0.4% margin), signaling critical earnings quality issues. Abysmal returns of 2.3% ROE and 0.8% ROA indicate the business destroys shareholder capital despite being debt-financed.
Strengths
- Strong liquidity position with 2.34x current ratio provides operational flexibility
- Moderate leverage at 0.99x debt-to-equity maintains balanced capital structure
- Essential waste management sector with stable demand dynamics
Risks
- Negative free cash flow of -$92.1M despite positive net income indicates severe earnings quality issues and unsustainable cash burn
- Operating cash flow of only $6.3M represents 0.4% of revenue, suggesting reported profits are not supported by actual cash generation
- Extremely low returns on equity (2.3%) and assets (0.8%) demonstrate poor capital efficiency and shareholder value destruction
Key Metrics to Watch
- Operating cash flow-to-net income conversion ratio and path to positive FCF
- Return on equity trend and evidence of improved capital deployment
- Organic vs acquisition-driven revenue breakdown and organic growth sustainability
Financial Metrics
Revenue
1.5B
Net Income
63.2M
EPS (Diluted)
$1.19
Free Cash Flow
-92.1M
Total Assets
7.6B
Cash
548.0M
Profitability Ratios
Gross Margin
16.1%
Operating Margin
8.1%
Net Margin
4.3%
ROE
2.3%
ROA
0.8%
FCF Margin
-6.3%
Balance Sheet & Liquidity
Current Ratio
2.34x
Quick Ratio
1.99x
Debt/Equity
0.99x
Debt/Assets
35.9%
Interest Coverage
N/A
Long-term Debt
2.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-07T07:00:35.952182 |
Data as of: 2026-03-31 |
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