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Waste Management, Inc. WM has an impressive Growth Score of B. This style score condenses all the essential metrics from a company’s financial statements to get a true sense of quality and sustainability of its growth. The company has an expected long-term earnings per share (three to five years) growth rate of 7.4%.
The stock gained 12.3% in the past six months, compared with 13.7% growth of the industry it belongs to.
What’s Behind the Rally?
Waste Management continues to execute core operating initiatives targeting focused differentiation and continuous improvement, and instill price and cost discipline to achieve better margins.
While differentiation through capitalization of extensive assets ensures long-term profitable growth and competitive advantages, cost control and process improvement help enhance service quality.
Waste Management has a dominant market capitalization and a steady dividend payment as well as share repurchase policy. In 2019, 2018 and 2017, the company had repurchased shares worth $248 million, $1.004 billion and $750 million, respectively. It paid $876 million, $802 million and $750 million in dividends during 2019, 2018 and 2017, respectively.
Waste Management plans to return significant cash to shareholders through healthy dividends and share repurchases in the future as well. These initiatives not only instill investors’ confidence but also positively impact earnings per share.
Waste Management’s cash and cash equivalent balance of $703 million at the end of the third-quarter 2020 was well below the long-term debt level of $10.3 billion, underscoring the fact that the company doesn’t have enough cash to meet this debt burden. The cash level, however, can meet the short-term debt of $167 million.
Zacks Rank and Stocks to Consider
Waste Management currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Automatic Data Processing ADP, Gartner, Inc. IT and Insperity NSP, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The long-term expected earnings per share (three to five years) growth rate for Automatic Data Processing, Gartner and Insperity is 12%, 13.5% and 15%, respectively.
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Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report
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Gartner, Inc. (IT) : Free Stock Analysis Report
Insperity, Inc. (NSP) : Free Stock Analysis Report
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