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Stock Market News: Waste Management Goes Shopping; Goldman Sachs Disappoints

Steve Symington, The Motley Fool

Major stock market indexes pulled back on Monday as the earliest quarterly reports of the corporate earnings season continued to trickle in. As of 1 p.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI) was down 64 points to 26,349, the S&P 500 (SNPINDEX: ^GSPC) dropped 7 points to 2,900, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) had fallen 24 points to 7,604.

As for individual stocks, shares of Advanced Disposal (NYSE: ADSW) soared after the waste-collection company agreed to be acquired, and Goldman Sachs (NYSE: GS) pulled back after posting underwhelming quarterly results.

Waste Management makes an acquisition

Shares of Advanced Disposal jumped 19% after the company agreed to be acquired by industry leader Waste Management (NYSE: WM) for $33.15 per share in cash, or a roughly 22.1% premium from Friday's close. Waste Management, for its part, is up nearly 3%.

Woman drawing a large yellow fish eating a smaller fish

Image source: Getty Images.

Including $1.9 billion of Advanced Disposal's debt, that brings the value of the deal to roughly $4.9 billion. It will be financed by Waste Management through its own bank debt and senior notes. In addition to expanding its footprint with Advanced Disposal's 3 million customers across 16 states in the Eastern U.S., Waste Management expects the purchase -- which is expected to close in early 2020 assuming it passes shareholder and regulatory approvals -- to be immediately accretive to its adjusted (non-GAAP) earnings and cash flow. Over the longer term, margins and cash flow should further benefit from expected annual cost and capital expenditure synergies of more than $100 million. 

"We view Waste Management as an industry leader with one of the most respected brands in the nation," stated Advanced Disposal CEO Richard Burke. "This acquisition stands as a testament to the strength of the Advanced Disposal business and brings together two strong waste management teams with extensive environmental services expertise to better serve our customers and communities."

Goldman Sachs' mixed quarter

Shares of Goldman Sachs were down 3% after the investment management firm announced mixed first-quarter 2019 results relative to Wall Street's expectations.

Goldman's quarterly revenue declined 13% year over year to $8.81 billion, falling short of consensus estimates for $9.04 billion. Adjusted earnings plunged 17.8% to $5.71 per share, but that beat expectations for an even steeper decline to $4.97 per share. Goldman also raised its quarterly dividend by $0.05 to $0.85 per share.

Management remained optimistic, with Chairman and CEO David Solomon insisting they were "pleased" with the quarter "especially in the context of a muted start to the year."

With shares up nearly 40% from their late-December low leading up to this report, it's no surprise to see Goldman Sachs stock giving back some of its gains today in response.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.