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Waste Management (WM) Likely to Disappoint in Q3 Earnings?
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Waste Management Inc. (WM - Free Report) is scheduled to report third-quarter 2017 results before the opening bell on Oct 26. In the last reported quarter, earnings missed the Zacks Consensus Estimate by a penny. Over the trailing four quarters, it delivered a positive average earnings surprise of 0.3%, beating estimates only once.
Let’s see how things are shaping up prior to this announcement.
Key Factors in the Quarter
Stringent government regulations are likely to contract Waste Management’s margins as compliance with such regulations increases operating costs. In order to develop or operate a landfill or any waste management unit, facility permits and other governmental approvals are necessary. These permits and approvals are often difficult to obtain, time consuming and costly and are likely to restrict its operations. All these might impact profitability in the quarter.
The company expects volumes to be down due to lower national counts as it strives for improved margin growth and pricing. The pricing environment also remains challenging and highly competitive due to aggressive bidding by smaller competitors. Waste Management needs to improve margins on the recycling side through adjustment of rebates to reflect lower pricing and also needs to improve the quality of inbound material to increase profitability. Decline in average recycling commodity prices and recycling volumes also remain headwinds.
However, Waste Management is executing well its initiatives to refocus on the core business activities and instill price and cost discipline to achieve better margins. The company further aims to focus on improving customer retention by providing better service and higher value solutions.
Earnings Whispers
Our proven model does not conclusively show that Waste Management is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at -0.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Waste Management has a Zacks Rank #4 (Sell).
Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Franklin Resources, Inc. (BEN - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #2.
KEMET Corporation (KEM - Free Report) has an Earnings ESP of +7.46% and a Zacks Rank #1.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Waste Management (WM) Likely to Disappoint in Q3 Earnings?
Waste Management Inc. (WM - Free Report) is scheduled to report third-quarter 2017 results before the opening bell on Oct 26. In the last reported quarter, earnings missed the Zacks Consensus Estimate by a penny. Over the trailing four quarters, it delivered a positive average earnings surprise of 0.3%, beating estimates only once.
Let’s see how things are shaping up prior to this announcement.
Key Factors in the Quarter
Stringent government regulations are likely to contract Waste Management’s margins as compliance with such regulations increases operating costs. In order to develop or operate a landfill or any waste management unit, facility permits and other governmental approvals are necessary. These permits and approvals are often difficult to obtain, time consuming and costly and are likely to restrict its operations. All these might impact profitability in the quarter.
The company expects volumes to be down due to lower national counts as it strives for improved margin growth and pricing. The pricing environment also remains challenging and highly competitive due to aggressive bidding by smaller competitors. Waste Management needs to improve margins on the recycling side through adjustment of rebates to reflect lower pricing and also needs to improve the quality of inbound material to increase profitability. Decline in average recycling commodity prices and recycling volumes also remain headwinds.
However, Waste Management is executing well its initiatives to refocus on the core business activities and instill price and cost discipline to achieve better margins. The company further aims to focus on improving customer retention by providing better service and higher value solutions.
Earnings Whispers
Our proven model does not conclusively show that Waste Management is likely to beat earnings this quarter as it does not possess the key components. A stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here as you will see below:
Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is pegged at -0.28%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Waste Management, Inc. Price and EPS Surprise
Waste Management, Inc. Price and EPS Surprise | Waste Management, Inc. Quote
Zacks Rank: Waste Management has a Zacks Rank #4 (Sell).
Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is seeing a negative estimate revisions momentum.
Stocks to Consider
Here are some companies that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:
Applied Materials, Inc. (AMAT - Free Report) has an Earnings ESP of +0.37% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Franklin Resources, Inc. (BEN - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #2.
KEMET Corporation (KEM - Free Report) has an Earnings ESP of +7.46% and a Zacks Rank #1.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>