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Waste Management's Subsidiary Buys Petro Waste Environmental

Zacks Equity Research

Waste Management, Inc.’s WM indirect wholly owned subsidiary — Waste Management Energy Services Holdings, LLC — yesterday announced the acquisition of Petro Waste Environmental from Tailwater Capital. The financial terms of the deal have been kept under wraps.

Petro Waste Environmental provides comprehensive oilfield environmental services and solid waste disposal facilities in the Permian Basin and Eagle Ford Shale Play (two of the major economically active oil and gas producing regions in the United States).

Shares of Waste Management have gained 15.2% in the past year compared with 10% rise of the industry it belongs to.


Deal Benefits

The acquisition seems to be part of Waste Management’s efforts to strengthen its solid waste business.

It is expected to expand Waste Management Energy Services’ offerings and enhance the quality of solid waste disposal services offered to oil and gas producing customers operating in Texas.

Scott Bradley, vice president of Four Corners Area at Waste Management, stated that, “By leveraging Petro Waste’s extensive footprint and scale, core competencies, state-of-the-art disposal facilities and robust customer base, we expect to generate momentum for significant and sustainable business growth.”

Notably, the company spent $466 million on acquisition of solid waste businesses in 2018. Total internal revenue growth of the business from volume was 2.9% and margin expanded 50 basis points.

Zacks Rank & Stocks to Consider

Currently, Waste Management is a Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Omnicom OMC, Paychex PAYX and Automatic Data Processing ADP, each carrying a Zacks Rank #2 (Buy). Long-term expected EPS (three to five years) growth rate for Omnicom, Paychex and Automatic Data Processing is 6.9%, 8.8% and 12.8%, respectively.

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