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Check These 4 Stocks From a Thriving Waste Removal Sector
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Increased government regulations, adoption of newer technologies and increasing awareness bode well for the Waste management industry. The industry is benefiting from heightened industrialization and urbanization, growing apprehensions about the environment, and the implementation of improved waste management methods. Per Statista, the global waste management sector was valued at $1.6 trillion in 2020 and is poised for significant expansion, projected to reach $2.5 trillion by 2030. Factors driving this growth include enhanced waste collection and rising volumes in emerging markets.
Waste Management, Inc. (WM - Free Report) , Republic Services, Inc. (RSG - Free Report) , Waste Connections, Inc. (WCN - Free Report) and Clean Harbors, Inc. (CLH - Free Report) , are some stocks likely to gain from the abovementioned factors.
Industry Description
Companies within the Zacks Waste Removal Services industry play a vital role in the collection, treatment, and responsible management of diverse waste types, aiming to minimize their impact on both the environment and public health. This market is categorized into distinct segments based on the type of waste, including Industrial, Commercial, Domestic, and Agricultural waste. The Industrial waste segment has gained significance due to the ongoing industrial expansion, creating substantial demand for efficient waste management solutions. When segmented by service type, the market encompasses Collection and Disposal services. The disposal services segment, driven by increasing demand for waste recycling is the peimary revenue-generating category.
Factors Influencing the Future of Waste Removal Services Industry
Reviving Demand: The industry is mature, with demand for services remaining stable over time. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic healthy levels, aiding most industry players in paying out stable dividends.
Rising importance of environmental, social and governance (ESG) goals: Waste management is a cornerstone of ESG principles, as it allows companies to enhance their ESG ratings by promoting environmental sustainability, fostering social well-being and upholding good governance. Embracing responsible waste management not only meets legal requirements but also aligns with consumer and investor desires for sustainable and ethical business practices. In the modern landscape, waste management is not merely a duty but a chance for businesses to showcase their dedication to ESG values, which underpin lasting success and resilience.
Technology bolsters the growth of the waste management industry: Technology has become a crucial ally in waste management, addressing the challenges of waste generation and environmental impact. This transformative correlation promises a more sustainable future. Advancing technology empowers more efficient, eco-friendly waste management, reducing the ecological footprint and promoting sustainability. In a world grappling with waste challenges, technology leads us toward responsible waste management and a cleaner planet.
Rising Costs a Headwind: Fluctuating commodity prices and changes in the global recycling landscape present a risk to the waste management sector. When recycling costs surpass market returns, waste management firms could encounter financial difficulties. Market disruptions like import restrictions by other nations on specific materials could affect recycling operations' profitability and sustainability.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the Zacks Business Services sector, currently carries a Zacks Industry Rank #49. This rank places it in the top 20% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that investors can buy or retain, given their sturdy potential, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Outperforms Sector but lags S&P 500
The Zacks Waste Removal Servicesindustry has outperformed the broader Zacks Business Services sector but lagged behind the Zacks S&P 500 composite over the past year.
The industry has gained 1.3% over this period against a 0.4% decline of the broader sector and a 6.8% upside of the Zacks S&P 500 composite.
One-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing Waste Removal services stocks, the industry is currently trading at 11.03X compared with the S&P 500’s 12.28X and the sector’s 22.99X.
Over the past year, the industry has traded as high as 13.02X, as low as 8.23X and at the median of 11.29X, as the charts below show.
EV-to-EBITDA
Let's discuss four stocks that are expected to benefit from the favorable industry conditions.
Clean Harbors, headquartered in Massachusetts, offers environmental and industrial solutions globally. The company prioritizes efficiency enhancement and cost reduction by leveraging advanced technology, streamlined processes, and rigorous cost control. Ongoing capital investments improve service quality and ensure compliance with governmental and local mandates. Strategic acquisitions broaden the company's service offerings, while steady share buybacks reinforce investor trust and contribute positively to earnings per share.
CLH’s 2023 revenues are expected to grow 5.4% from the year-ago reported figure. The company’s 2023 EPS estimates indicate a slight growth from the year ago reported figure and the estimate has been revised 1% northwards since the past 90 days. The company currently holds Zacks Rank #2 (Buy).
The company has gained 23.3% in the past year.
Price & Consensus: CLH
Republic Services, headquartered in Arizona, provides environmental services across the United States. The company's revenue growth benefits from favorable acquisitions and internal expansion. Republic Services is actively enhancing operational efficiency through initiatives like transitioning to compressed natural gas collection vehicles and upgrading rear-loading trucks to automated-side loaders, resulting in cost reduction and improved profitability. Furthermore, its steady dividend distribution and share repurchases enhance both investor trust and earnings per share.
RSG’s 2023 revenues are expected to grow 9.8% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 9.7% growth from the year-ago reported figure and the estimate has been revised 1.1% northwards since the past 90 days. The company currently holds Zacks Rank #2 (Buy).
The company has gained 10.1% in the past year.
Price & Consensus: RSG
Waste Management is a leading waste management company in the USA. It provides comprehensive environmental services, including waste collection, recycling, disposal, and sustainable solutions, contributing to a cleaner, more sustainable future. Waste Management‘s commitment to implementing its fundamental operational strategies while enforcing effective pricing and cost control bolsters its growth. Consistent dividend payments and share buybacks boost investors' confidence and positively impact earnings per share.
WM’s 2023 revenues are expected to grow 3.7% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 6.6% growth from the year-ago reported figure and the estimate has been kept constant for the past 90 days. The company currently holds Zacks Rank #3 (Hold).
The company has gained 1.9% in the past year.
Price & Consensus: WM
Waste Connections is a leading North American waste management company providing collection, disposal, and recycling services. They focus on sustainable and responsible waste solutions, serving residential, commercial, and industrial clients. The company's strategy of targeting secondary and rural markets to secure a larger local market share is commendable. Their well-placed assets enhance profitability, and acquisitions drive growth. Their commitment to rewarding shareholders fosters investor trust.
WCN’s 2023 revenues are expected to grow 11.2% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 9.2% growth from the year-ago reported figure. The company currently holds Zacks Rank #3 (Hold).
The company has declined 2.9% in the past year.
Price & Consensus: WCN
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Check These 4 Stocks From a Thriving Waste Removal Sector
Increased government regulations, adoption of newer technologies and increasing awareness bode well for the Waste management industry. The industry is benefiting from heightened industrialization and urbanization, growing apprehensions about the environment, and the implementation of improved waste management methods. Per Statista, the global waste management sector was valued at $1.6 trillion in 2020 and is poised for significant expansion, projected to reach $2.5 trillion by 2030. Factors driving this growth include enhanced waste collection and rising volumes in emerging markets.
Waste Management, Inc. (WM - Free Report) , Republic Services, Inc. (RSG - Free Report) , Waste Connections, Inc. (WCN - Free Report) and Clean Harbors, Inc. (CLH - Free Report) , are some stocks likely to gain from the abovementioned factors.
Industry Description
Companies within the Zacks Waste Removal Services industry play a vital role in the collection, treatment, and responsible management of diverse waste types, aiming to minimize their impact on both the environment and public health. This market is categorized into distinct segments based on the type of waste, including Industrial, Commercial, Domestic, and Agricultural waste. The Industrial waste segment has gained significance due to the ongoing industrial expansion, creating substantial demand for efficient waste management solutions. When segmented by service type, the market encompasses Collection and Disposal services. The disposal services segment, driven by increasing demand for waste recycling is the peimary revenue-generating category.
Factors Influencing the Future of Waste Removal Services Industry
Reviving Demand: The industry is mature, with demand for services remaining stable over time. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic healthy levels, aiding most industry players in paying out stable dividends.
Rising importance of environmental, social and governance (ESG) goals: Waste management is a cornerstone of ESG principles, as it allows companies to enhance their ESG ratings by promoting environmental sustainability, fostering social well-being and upholding good governance. Embracing responsible waste management not only meets legal requirements but also aligns with consumer and investor desires for sustainable and ethical business practices. In the modern landscape, waste management is not merely a duty but a chance for businesses to showcase their dedication to ESG values, which underpin lasting success and resilience.
Technology bolsters the growth of the waste management industry: Technology has become a crucial ally in waste management, addressing the challenges of waste generation and environmental impact. This transformative correlation promises a more sustainable future. Advancing technology empowers more efficient, eco-friendly waste management, reducing the ecological footprint and promoting sustainability. In a world grappling with waste challenges, technology leads us toward responsible waste management and a cleaner planet.
Rising Costs a Headwind: Fluctuating commodity prices and changes in the global recycling landscape present a risk to the waste management sector. When recycling costs surpass market returns, waste management firms could encounter financial difficulties. Market disruptions like import restrictions by other nations on specific materials could affect recycling operations' profitability and sustainability.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the Zacks Business Services sector, currently carries a Zacks Industry Rank #49. This rank places it in the top 20% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that investors can buy or retain, given their sturdy potential, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Outperforms Sector but lags S&P 500
The Zacks Waste Removal Servicesindustry has outperformed the broader Zacks Business Services sector but lagged behind the Zacks S&P 500 composite over the past year.
The industry has gained 1.3% over this period against a 0.4% decline of the broader sector and a 6.8% upside of the Zacks S&P 500 composite.
One-Year Price Performance
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing Waste Removal services stocks, the industry is currently trading at 11.03X compared with the S&P 500’s 12.28X and the sector’s 22.99X.
Over the past year, the industry has traded as high as 13.02X, as low as 8.23X and at the median of 11.29X, as the charts below show.
EV-to-EBITDA
Let's discuss four stocks that are expected to benefit from the favorable industry conditions.
Clean Harbors, headquartered in Massachusetts, offers environmental and industrial solutions globally. The company prioritizes efficiency enhancement and cost reduction by leveraging advanced technology, streamlined processes, and rigorous cost control. Ongoing capital investments improve service quality and ensure compliance with governmental and local mandates. Strategic acquisitions broaden the company's service offerings, while steady share buybacks reinforce investor trust and contribute positively to earnings per share.
CLH’s 2023 revenues are expected to grow 5.4% from the year-ago reported figure. The company’s 2023 EPS estimates indicate a slight growth from the year ago reported figure and the estimate has been revised 1% northwards since the past 90 days. The company currently holds Zacks Rank #2 (Buy).
The company has gained 23.3% in the past year.
Price & Consensus: CLH
Republic Services, headquartered in Arizona, provides environmental services across the United States. The company's revenue growth benefits from favorable acquisitions and internal expansion. Republic Services is actively enhancing operational efficiency through initiatives like transitioning to compressed natural gas collection vehicles and upgrading rear-loading trucks to automated-side loaders, resulting in cost reduction and improved profitability. Furthermore, its steady dividend distribution and share repurchases enhance both investor trust and earnings per share.
RSG’s 2023 revenues are expected to grow 9.8% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 9.7% growth from the year-ago reported figure and the estimate has been revised 1.1% northwards since the past 90 days. The company currently holds Zacks Rank #2 (Buy).
The company has gained 10.1% in the past year.
Price & Consensus: RSG
Waste Management is a leading waste management company in the USA. It provides comprehensive environmental services, including waste collection, recycling, disposal, and sustainable solutions, contributing to a cleaner, more sustainable future. Waste Management‘s commitment to implementing its fundamental operational strategies while enforcing effective pricing and cost control bolsters its growth. Consistent dividend payments and share buybacks boost investors' confidence and positively impact earnings per share.
WM’s 2023 revenues are expected to grow 3.7% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 6.6% growth from the year-ago reported figure and the estimate has been kept constant for the past 90 days. The company currently holds Zacks Rank #3 (Hold).
The company has gained 1.9% in the past year.
Price & Consensus: WM
Waste Connections is a leading North American waste management company providing collection, disposal, and recycling services. They focus on sustainable and responsible waste solutions, serving residential, commercial, and industrial clients. The company's strategy of targeting secondary and rural markets to secure a larger local market share is commendable. Their well-placed assets enhance profitability, and acquisitions drive growth. Their commitment to rewarding shareholders fosters investor trust.
WCN’s 2023 revenues are expected to grow 11.2% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 9.2% growth from the year-ago reported figure. The company currently holds Zacks Rank #3 (Hold).
The company has declined 2.9% in the past year.
Price & Consensus: WCN