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Why You Should Hold Waste Management Stock in Your Portfolio Now
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Waste Management, Inc. (WM - Free Report) has had an impressive run over the past year. The stock has gained 36%, outperforming the 34% rise of the industry it belongs to and the Zacks S&P 500 composite 35% rally.
WM has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
WM has an expected long-term (three to five years) EPS growth rate of 12.4%. The company’s earnings for 2024 and 2025 are expected to grow 17% and 10%, respectively.
The company is North America's largest waste management company, controlling a significant market share. Its strong reputation and widespread operations give it a competitive edge, allowing for scalability and the ability to negotiate favorable contracts with municipalities and businesses. This market leadership acts as a buffer against competition and volatility.
Over the years, WM has shown consistent revenue growth. The company's business model is recession-resistant because waste management is an essential service, regardless of economic conditions. Its steady financial performance appeals to risk-averse investors looking for long-term stable returns.
WM has been a leader in promoting sustainability within the waste management industry. It has invested significantly in recycling programs, renewable energy projects, and landfill gas-to-energy initiatives. These initiatives position the company as an eco-conscious leader, which resonates well with environmental, social and governance investors.
Strategic Acquisitions
The 2020 acquisition of Advanced Disposal enhanced WM’s market share and added to its capacity for waste collection, recycling and disposal services. This strengthens the company’s position in existing and new markets.
Waste Management is set to acquire Stericycle, with the deal expected to close as early as the fourth quarter of 2024. WM anticipates that the acquisition will be accretive to its earnings and cash flows within one year of closing, with more than $125 million in annual run-rate synergies.
Stericycle holds a leading position in the growing medical waste industry. The acquisition will add complementary business platforms to enhance WM’s comprehensive waste and environmental solutions. However, investors should monitor how the acquisition impacts the company’s pricing discipline, especially since Stericycle has faced challenges in maintaining pricing power.
WM’s Reliable Dividend Payout
Waste Management boasts a significant market capitalization and maintains a consistent dividend and share repurchase policy. This commitment to returning value to shareholders makes WM an attractive option for investors seeking long-term wealth accumulation.
In 2023, 2022 and 2021, the company repurchased shares worth $1.3 billion, $1.5 billion and $1.35 billion, respectively. Additionally, it paid out $1.14 billion, $1.1 billion and $970 million in dividends during those years, respectively. Waste Management plans to continue returning substantial cash to shareholders through healthy dividends and share repurchases in the future.
Some Risks
Being part of an industry that handles waste and emissions, WM is subject to stringent environmental regulations. Any changes in environmental laws or stricter government policies, such as carbon emissions taxes or recycling mandates, could increase operational costs, impact profitability, or lead to legal challenges.
WM's business requires continuous investment in equipment, vehicles and infrastructure. The high capital expenditures needed to maintain and expand operations can be a financial burden, especially if revenue growth slows or economic conditions worsen.
Image: Bigstock
Why You Should Hold Waste Management Stock in Your Portfolio Now
Waste Management, Inc. (WM - Free Report) has had an impressive run over the past year. The stock has gained 36%, outperforming the 34% rise of the industry it belongs to and the Zacks S&P 500 composite 35% rally.
WM has an impressive Growth Score of B. This style score condenses all the essential metrics from the company’s financial statements to get a true sense of the quality and sustainability of its growth.
WM has an expected long-term (three to five years) EPS growth rate of 12.4%. The company’s earnings for 2024 and 2025 are expected to grow 17% and 10%, respectively.
Waste Management, Inc. Price
Waste Management, Inc. price | Waste Management, Inc. Quote
WM’s Market Leadership
The company is North America's largest waste management company, controlling a significant market share. Its strong reputation and widespread operations give it a competitive edge, allowing for scalability and the ability to negotiate favorable contracts with municipalities and businesses. This market leadership acts as a buffer against competition and volatility.
Over the years, WM has shown consistent revenue growth. The company's business model is recession-resistant because waste management is an essential service, regardless of economic conditions. Its steady financial performance appeals to risk-averse investors looking for long-term stable returns.
WM has been a leader in promoting sustainability within the waste management industry. It has invested significantly in recycling programs, renewable energy projects, and landfill gas-to-energy initiatives. These initiatives position the company as an eco-conscious leader, which resonates well with environmental, social and governance investors.
Strategic Acquisitions
The 2020 acquisition of Advanced Disposal enhanced WM’s market share and added to its capacity for waste collection, recycling and disposal services. This strengthens the company’s position in existing and new markets.
Waste Management is set to acquire Stericycle, with the deal expected to close as early as the fourth quarter of 2024. WM anticipates that the acquisition will be accretive to its earnings and cash flows within one year of closing, with more than $125 million in annual run-rate synergies.
Stericycle holds a leading position in the growing medical waste industry. The acquisition will add complementary business platforms to enhance WM’s comprehensive waste and environmental solutions. However, investors should monitor how the acquisition impacts the company’s pricing discipline, especially since Stericycle has faced challenges in maintaining pricing power.
WM’s Reliable Dividend Payout
Waste Management boasts a significant market capitalization and maintains a consistent dividend and share repurchase policy. This commitment to returning value to shareholders makes WM an attractive option for investors seeking long-term wealth accumulation.
In 2023, 2022 and 2021, the company repurchased shares worth $1.3 billion, $1.5 billion and $1.35 billion, respectively. Additionally, it paid out $1.14 billion, $1.1 billion and $970 million in dividends during those years, respectively. Waste Management plans to continue returning substantial cash to shareholders through healthy dividends and share repurchases in the future.
Some Risks
Being part of an industry that handles waste and emissions, WM is subject to stringent environmental regulations. Any changes in environmental laws or stricter government policies, such as carbon emissions taxes or recycling mandates, could increase operational costs, impact profitability, or lead to legal challenges.
WM's business requires continuous investment in equipment, vehicles and infrastructure. The high capital expenditures needed to maintain and expand operations can be a financial burden, especially if revenue growth slows or economic conditions worsen.
Zacks Rank and Stocks to Consider
WM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader Zacks Business Services sector are DocuSign (DOCU - Free Report) and Parsons (PSN - Free Report) , each carrying a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DocuSign has a long-term earnings growth expectation of 9.3%. DOCU delivered a trailing four-quarter earnings surprise of 18.3%, on average.
Parsons has a long-term earnings growth expectation of 16.1%. PSN delivered a trailing four-quarter earnings surprise of 16.2%, on average.