CLH

Clean Harbors ($CLH): Co-CEO's Contrarian Purchase After $44M Executive Sales...Mixed Signals from Environmental Services Growth vs Safety-Kleen Decline

08/04/2025 19:04

Clean Harbors ($CLH) stands as North America's leading environmental and industrial services provider, specializing in hazardous waste management and sustainability solutions as a large-cap company. Founded in 1980 and headquartered in Norwell, Massachusetts, the company employs approximately 22,800 people. Its Environmental Services segment handles hazardous waste collection, transportation, treatment, and disposal, while the Safety-Kleen Sustainability Solutions segment provides containerized waste management services primarily to automotive repair shops. The insider trading patterns at Clean Harbors over the past year have sent significant signals to investors. Most notable is the continuous large-scale selling by CEO Alan McKim, who sold $10.8 million in June 2024, $11.2 million in March 2025, and a massive $22.4 million in June 2025. Overall, executive and director sales have exceeded $44 million over the past year, executed when the stock was trading between $215 and $260, suggesting insiders realized substantial profits. However, Co-CEO Michael Battles' purchase of 2,000 shares at $233.50 per share on August 1st, investing $467,000, sends a completely different signal. This marks only the second executive purchase in 2025, following Officer Eric Dugas' $201,000 purchase in March. Battles' timing is particularly significant, coming immediately after markets declined sharply due to tariff concerns and weak employment data. When insiders buy their own company's stock, it typically signals strong conviction about undervaluation. Clean Harbors' business performance shows mixed results across segments. Q2 2025 total revenue of $1.55 billion remained essentially flat year-over-year (-0.2%), but the Environmental Services segment grew 4.2% to $1.35 billion. Conversely, the Safety-Kleen Sustainability Solutions segment plummeted 22.6% to $197.7 million, attributed to delayed refinery maintenance and weather-related disruptions. From a stock price perspective, Clean Harbors has experienced considerable volatility since June 2024. After reaching a peak near $263 in October 2024, the stock crashed to $231 in November before recovering. In March 2025, it hit a low of $188 before gradually recovering to current levels around $234. This recent sideways pattern contrasts with the long-term bull trend of +120% over three years and +289% over five years. Key valuation metrics show Clean Harbors trading at a price-to-book ratio of 4.63x and price-to-sales ratio of 2.13x, somewhat above industry averages but reasonable given its market-leading position and growth prospects. The return on equity of 14.93% is particularly strong, while a current ratio of 2.45 indicates ample short-term liquidity. Looking ahead, investors should focus on the Environmental Services segment's continued growth momentum and whether the Safety-Kleen segment can recover. The company is pursuing a 'charge-for-oil' strategy to capitalize on oil industry recovery trends while focusing on improved incineration utilization and enhanced resource recovery capabilities. A recent $600,000 OSHA fine presents a short-term risk factor, though the company continues improving safety protocols. Market experts hold mixed views on Clean Harbors. Environmental services industry specialists view strengthening ESG regulations and increasing industrial waste trends as long-term positives. Carbon neutrality policies and circular economy expansion are expected to boost demand for the company's sustainability solutions. However, short-term concerns include Safety-Kleen segment weakness and overall industrial activity slowdown. During early August 2025 market declines triggered by tariff hike concerns and weak employment data—with the Dow falling over 500 points, S&P 500 down 1.6%, and Nasdaq declining 2.2%—Battles' purchase on August 1st demonstrates confidence in company fundamentals despite market uncertainty. Investors should consider multiple scenarios at current price levels. In an optimistic scenario, accelerated Environmental Services growth combined with Safety-Kleen recovery could drive the stock above $280. The base case scenario suggests trading in the $250-270 range, representing 10-15% upside from current levels. However, a cautionary scenario involving macroeconomic slowdown and heightened regulatory risks could see the stock decline toward $200. In conclusion, Clean Harbors remains a quality company with long-term growth drivers, but recent insider trading patterns, mixed earnings results, and market volatility warrant careful consideration. While Battles' recent purchase provides a positive signal, its scale is insufficient to offset the broader selling pressure. Investors should closely monitor Environmental Services segment growth sustainability and Safety-Kleen recovery pace while considering gradual position building.