Why Stericycle Inc's Stock Is Getting Shredded Today

By Matthew DiLalloMarketsFool.com

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What: Shares of Stericycle Inc (NASDAQ: SRCL) are getting destroyed today, with the stock down more than 15% at 11:00 a.m. ET on Friday.

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So what: Investors are reacting to Stericycle's decision to cut its guidance once again. Several factors, including foreign exchange headwinds, a challenging hazardous waste market, and increasing pricing pressure are driving the downward revision to the company's outlook. As a result, the company now sees revenue in the range of $3.56 billion to $3.6 billion. That is down from last quarter's projections of sales in the range of $3.6 billion to $3.66 billion and its initial projections of revenue in the range of $3.56 billion to $3.72 billion. The company's outlook for earnings, likewise, continues to come down. After starting the year with non-GAAP earning projections of $5.28 to $5.35 per share, Stericycle watered that down to a range of $4.90 to $5.05 last quarter and again down to $4.68 to $4.75 per share in its latest revision. Needless to say, the market is not happy with this trend.

The company is doing several things to combat its headwinds, including hiring a consulting firm to optimize its organizational structure. In addition to that, Stericycle is investing in its sales force to drive new customer growth, which is expected to push selling expenses higher and weigh on profitability in the interim.

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Now what: Stericycle is losing its battle against a varietyof headwinds right now, and they appear to be strengthening. That is forcing the company to double down on its efforts to combat these challenges. That said, given how deeply these challenges affected Stericycle, the market is starting to lose faith in management's ability to overcome the obstacles.

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Matt DiLallo owns shares of Stericycle. The Motley Fool recommends 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.