Stericycle Inc. Earnings Preview: Will the Good Times Continue to Roll?

The biomedical waste disposal business is surprisingly booming. At least that's the sense one would get from looking at the recent results of disposal leader Stericycle . Over the past two quarters the company turned trash into treasure and used smart acquisitions to send its revenue up 24.9% and 19.2% over the respective prior-year quarters. That trend is expected to continue when the company reports results on Thursday, April 23, after markets close.

Unstoppable growth, so farStericycle continued its remarkably steady growth in 2014, with full-year revenue rising 19.3% to $2.6 billion. Acquisitions fueled the bulk of that growth, contributing $301.6 million to the company's top line. Growth, both acquired and organic, joined with steady operations to produce $1.1 billion in profit, which was a very robust 42.9% of revenue and boosted the company's earningsby 13.8% over the prior year. As shown on the next slide, the company's growth now extends over more than a decade.

Source: Stericycle Investor Presentation.

One thing worth noting is that while revenue growth accelerated last year, both EBIT and EPS growth slowed. This was because margins contracted a bit, which resulted in gross profit as a percentage of revenue declining from 45.1% in 2013 to 42.9% in 2014. That said, the company is clearly still growing impressively.

What we want to see this weekIdeally, we'd like to see Stericycle further grow both revenue and profit when it reports this week. The company reported revenue of $570 million in the first quarter of last year, which was up 10.9% from the first quarter of 2013. Beating that number isn't expected to be a problem thanks in part to Stericycle's acquisitions last year. Those acquisitions, when combined with anticipated organic growth, should push Stericycle's revenue to $676.4 million in the first quarter, according to analysts.

Analysts see that strong revenue growth pushing earnings higher as well. Last year the company earned $1.04 per share in the first quarter, which was 17.6% higher than the first quarter of 2013. That number should climb to $1.10 per share for the first quarter, according to analysts. We want to see the company meet, or exceed, that consensus number, which it has historically done -- last year it met estimates twice and beat them twice, including a $0.05 per share beat in the first quarter.

We'd also this week like to hear news that the company is closing in on another acquisition. In a recent investor presentation the company said it has made 392 acquisitions since 1993 and that it sees a worldwide acquisition pool that represents $100 million in revenue. Buyouts are key to Stericycle's growth, so it will need to continue to buy up competitors. News that it has another deal in hand could be a catalyst to push the stock higher.

Investor takeawayStericycle is expected to report another quarter of growth this week. That is largely due to the fact that the company operates in a regulated industry and continues to acquire its competitors. With no signs on the horizon that either will change, it seems Stericycle's growth won't halt anytime soon.

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Matt DiLallo owns shares of Stericycle. The Motley Fool recommends Stericycle. The Motley Fool owns shares of Stericycle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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