A prudent investment decision involves buying well-performing stocks at the right time, while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bull run.
Waste Management, Inc. WM is a waste removal services stock that has performed well so far this year and has the potential to sustain the momentum in the near term. Consequently, if you have not taken advantage of its share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse at the company’s price trend reveals that the stock has had an impressive run on the bourse on a year-to-date basis. Shares of Waste Management have gained 25.8% in the said time frame, outperforming 19.4% rally of the industry it belongs to and 18.6% rise of the Zacks S&P 500 composite.
Solid Rank & VGM Score: Waste Management currently carries a Zacks Rank #2 (Buy) and has a VGM Score of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities. Thus, the company appears to be a compelling investment proposition at the moment.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Positive Earnings Surprise History: Waste Management has an impressive earnings surprise history. The company outpaced the consensus mark in each of the trailing four quarters, delivering average positive earnings surprise of 4.3%.
Strong Growth Prospects: The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.15, indicating growth of 0.4% from the year-ago reported figure. Moreover, earnings are expected to register 3% growth in 2019 and 8.7% in 2020. The stock has an expected long-term (three to five years) earnings per share growth rate of 8.6%.
Driving Factors: Waste Management continues to execute its core operating objectives of focused differentiation and continuous improvement, and instill price and cost discipline to achieve better margins. Focused differentiation through capitalization of extensive assets ensures profitable growth and offers competitive advantages. The company's successful cost-reduction initiatives have helped it in accomplishing remarkable gross margin expansion and EBITDA growth over the quarters.
Strong yield and volume growth in the company’s collection and disposal business continue to boost revenues. Solid performance in its traditional solid waste business continues to boost cash and earnings. Waste Management expects the momentum in its solid waste lines of business.
The company has been a consistent and healthy dividend payer, apart from rewarding its shareholders through share buybacks. In the first half of 2019, Waste Management paid out dividends worth $440 million and repurchased shares worth $248 million. In 2018, the company paid out $802 million in dividends and repurchased shares worth $1.004 billion. Such moves indicate its commitment to create value for shareholders and underline confidence in its business.
Other Stocks to Consider
Some top-ranked stocks in the broader Zacks Business Services sector are Huron Consulting HURN, Charles River Associates CRAI and Fiserv FISV. While Fiserv sports a Zacks Rank #1, Huron Consulting and Charles River Associates carry a Zacks Rank #2.
Long-term earnings (three to five years) growth rate for Huron Consulting, Charles River Associates and Fiserv is estimated 13.5%, 13% and 12%, respectively.
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Huron Consulting Group Inc. (HURN) : Free Stock Analysis Report
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Fiserv, Inc. (FISV) : Free Stock Analysis Report
Waste Management, Inc. (WM) : Free Stock Analysis Report
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