Based on Waste Management, Inc.’s (NYSE:WM) recently announced earnings update on 31 December 2018, it seems that analyst forecasts are fairly pessimistic, with earnings expected to decline by -4.1% in the upcoming year relative to the past 5-year average growth rate of 34%. With trailing-twelve-month net income at current levels of US$1.9b, the consensus growth rate suggests that earnings will decline to US$1.8b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Waste Management in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will Waste Management perform in the near future?
Over the next three years, it seems the consensus view of the 12 analysts covering WM is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for WM, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, WM’s earnings should reach US$2.1b, from current levels of US$1.9b, resulting in an annual growth rate of 2.0%. EPS reaches $5.29 in the final year of forecast compared to the current $4.49 EPS today. Analysts are predicting this high revenue growth to squeeze profit margins over time, from 13% to 12% by the end of 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Waste Management, I’ve compiled three fundamental factors you should further research:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Waste Management worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Waste Management is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Waste Management? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.