Running head: DISCUSSION BOARD 1 1
Discussion Board 1
BUS 530, Managerial Finance
Liberty University
Stericycle
Industry Conditions
Stericycle is one of the largest business-to-business service providers in North
America. It specializes in providing services for medical waste management as well as
disposal and collection of confidential information to be destroyed securely. It also
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provides Occupational Safety and Health Act of 1970 (OSHA) compliance services such
as hospital-acquired infection monitoring software and disposal of expired medications.
Stericycle has a wide range of business customers, which mainly consist of medical
facilities but are not limited to banks, government facilities and other businesses. In 2015,
Stericycle had over 1,000,000 customers worldwide, in further examining the finances
and the economic position we can decide whether or not to invest in this company. (S&P
Capital IQ, 2017)
Financial Position
Stericycle has become one of the top well-known brands for waste management
throughout the country. The company’s annual revenue has been coming to a gradual
increase, in the time span of 2012 to 2015 revenue has increased by over 1,000 million
dollars. The company’s return on equity (ROE) has averaged 20% in the past five years,
which allows the company to make a profit from the current amount of money they have
been entrusted with. Stericycle was able to acquire Shred-it International for $2.3 billion
in the year of 2015; this enabled them to broaden the resourcefulness of the company.
(S&P Capital IQ, 2017)
Economic Outlook
The United States is constantly expanding with the new generation rising up as
well as immigration. There will always be a need for employment and healthcare
services. One of the major focuses of Stericycle is to dispose of hazardous wastes and
materials on behalf of medical facilities. Stericycle has a medium amount of risk
according to analysts because this industry is fairly recession-resistant (S&P Capital IQ,
2017). Regardless of whether or not the economy is in an ideal state, medical facilities
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will continue to care for patients that require help and will accumulate waste that needs to
be disposed properly. Stericycle would be in demand by medical facilities and by other
diverse facilities as the company specializes in disposing confidential documents as well
as other objects. In 2 Corinthians 8: 20-21 it reads, “taking every precaution against
scandal. We're being as careful in our reputation with the public as in our reputation with
God.” (The Message Bible) It is extremely important that as employers we maintain the
safety and confidentiality of our patients and employees. Stericycle enables business
owners to discard of company property safely and confidentially.
The company also offers recycle and recall programs that allows them to profit
from material being destroyed. A study was conducted in India to measure the outcome of
waste management and recycling, studies showed that hospitals were able to treat more
patients that were in need. Hospitals were able to reduce patient treatment costs and
reduce environmental pollution that these wastes could have produced. (Hemchandra,
Shishoo, Masih, Sah, Rinkoo, Dhole & Pandey, 2014)
Investment
It would be beneficial to invest in Stericycle as it has been increasing in quality,
value, and profit. According to S&P’s Capital IQ report, Stericycle has an 87% chance of
investability (2017). The company has been shown to be increasing in revenue and value
since 2012. The ROE has averaged up to 20% that shows that the company is able to
deliver a profit to its shareholders. The company does not have high risk especially since
waste management is relatively recession-resistant. Although Stericycle’s large amount of
customers are in the medical field, the company has been expanding to appeal to more
diverse businesses. In expanding the company’s specialties, Stericycle is able to improve
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the stability of their business by relying on a more diverse customer base. (S&P Capital
IQ, 2017)
References
Hemchandra, Shishoo, S., Masih, L., Sah, B., Rinkoo, A. V., Dhole, T. N., & Pandey, A.
(2014). Analysis of cost containment, cost recovery and sustainability of hospital
waste management system case study of Sanjay Ghandi post graduate institute of
medical sciences, Lucknow, India. Journal Of Financial Management & Analysis,
27(2), 41-50.
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S&P Capital IQ: Stericycle Inc. (2017). McGraw Hill Financial, Retrieved January 19,
2017 from
http://www.netadvantage.standardandpoors.com.ezproxy.liberty.edu/NASApp/Net
Advantage/cp/companyOverView.do?
SPPW_ID=8742&pc=NET&auth=0650350392412510212310302080321452530
96003246093&tracking=NET
