Waste Management, Inc.’s WM stock has gained 31.5% year to date, outperforming the 25.8% rally of the industry it belongs to.
With an expected long-term earnings per share growth rate of 8.6% and a market cap of $49.7 billion, Waste Management seems to be a stock that investors should retain in their portfolio for now.
What’s Driving the Company?
Waste Management is investing in people, technology, asset network, and the customer to improve performance. It 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 competitive advantage. Cost-reduction initiatives have helped the company in accomplishing remarkable gross margin expansion and EBITDA growth over the quarters. Strong performance in the traditional solid waste business continues to increase cash and earnings of the company.
Waste Management, Inc. EPS Diluted (TTM)
Waste Management, Inc. eps-diluted-ttm | Waste Management, Inc. Quote
The recently announced acquisition of Advanced Disposal will add complementary assets and customer base, helping Waste management to strengthen its footprint across the eastern half of the United States.
It is anticipated to be immediately accretive to the company’s adjusted EPS, cash flow from core operating performance and selling general and administrative cost savings. More than $100 million in annual cost savings and capital expenditure is expected from the transaction. It is anticipated to be completed by the first quarter of 2020.
Despite riding on significant growth prospects, Waste Management is not free from overhangs. The company has a debt-laden balance sheet and faces seasonal fluctuations in revenues. As of Mar 31, 2019, long-term debt was $9.3 billion while cash and cash equivalents were $57 million.
Nevertheless, we believe that prudent investments, acquisitions and cost-reduction initiatives bode well for Waste Management for the long term.
Zacks Rank & Stocks to Consider
Waste Management currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A few better-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting NCI, NV5 Global NVEE and FLEETCOR Technologies FLT. While Navigant Consulting sports a Zacks Rank #1, FLEETCOR and NV5 Global carry a Zacks Rank #2 (Buy).
Long-term expected EPS (three to five years) growth rate for Navigant Consulting, FLEETCOR and NV5 Global is 13.5%, 15.4% and 20%, respectively.
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