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Waste Management (WM) Gains As Market Dips: What You Should Know

Zacks Equity Research

In the latest trading session, Waste Management (WM) closed at $101.66, marking a +0.52% move from the previous day. This change outpaced the S&P 500's 0.52% loss on the day. Meanwhile, the Dow lost 0.13%, and the Nasdaq, a tech-heavy index, lost 1.4%.

Coming into today, shares of the garbage and recycling hauler had gained 6.9% in the past month. In that same time, the Business Services sector gained 8.19%, while the S&P 500 gained 13.35%.

WM will be looking to display strength as it nears its next earnings release, which is expected to be May 6, 2020. The company is expected to report EPS of $0.93, down 1.06% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $3.73 billion, up 1.02% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $3.90 per share and revenue of $14.69 billion, which would represent changes of -11.36% and -4.97%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for WM. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 11.09% lower within the past month. WM is currently sporting a Zacks Rank of #4 (Sell).

In terms of valuation, WM is currently trading at a Forward P/E ratio of 25.95. This represents a discount compared to its industry's average Forward P/E of 30.27.

Also, we should mention that WM has a PEG ratio of 3.07. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Waste Removal Services was holding an average PEG ratio of 3.07 at yesterday's closing price.

The Waste Removal Services industry is part of the Business Services sector. This group has a Zacks Industry Rank of 174, putting it in the bottom 32% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

You can find more information on all of these metrics, and much more, on Zacks.com.

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