In a concerted effort to augment its market presence, Waste Management, Inc. (WM) recently acquired two energy services companies – Summit Energy Services and Liquid Logistics in North Dakota for an undisclosed amount. The acquired businesses will enable Waste Management to expand its environmental service offerings to oil and gas industry customers engaged in the Bakken Shale formation – one of the largest oil fields in the U.S.
With the twin acquisitions, Waste Management has put on board an additional 140 employees with an expertise in roustabout and oil well-site maintenance, road and well-site pad construction, storm water and erosion control management, aggregate crushing and sales and well monitoring pumping. Buoyed by such human capital, Waste Management intends to eventually add service offerings such as rig maintenance and tank cleaning, drill cuttings solidification and disposal in its portfolio.
Waste Management expects 2013 adjusted EPS to be in the range of $2.15 -$2.20. Free cash flow is projected between $1.1 billion and $1.2 billion. We remain encouraged about the acquisitions and expect the company to meet its earnings guidance.
Headquartered in Houston, Texas, Waste Management is the largest provider of comprehensive waste management services in North America. The company provides collection, transfer, recycling and resource recovery, as well as disposal services to nearly 20 million residential, commercial, industrial and municipal customers. It is also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the U.S.
Currently, Waste Management has five operating groups including Eastern, Midwest, Southern, Western, and the Wheelabrator. The Wheelabrator group includes the company’s waste-to-energy facilities and independent power production plants. The company also has a joint venture with Linde Group, which includes a plant that converts landfill gas into liquefied natural gas for use as fuel in the company’s trucks.
Waste Management has a Zacks Rank #3 (Hold). Other stocks in the industry that look promising and are worth considering now include US Ecology, Inc. (ECOL) with a Zacks Rank #1 (Strong Buy), and Stericycle, Inc. (SRCL) and Heartland Payment Systems, Inc. (HPY), both carrying a Zacks Rank #2 (Buy).
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