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Why Is Waste Management (WM) Down 1.4% Since its Last Earnings Report?
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It has been about a month since the last earnings report for Waste Management, Inc. (WM - Free Report) . Shares have lost about 1.4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is WM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
First-Quarter Results
Waste Management, Inc. (WM - Free Report) reported mixed first-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
The company’s earnings per share of 91 cents topped the Zacks Consensus Estimate by 11% and improved 35.8% year over year. Total revenues came in at $3.5 billion missing the consensus mark by 1.2%. However, the top line increased 2.1% on a year-over-year basis.
Strong yield and volume growth in the company’s collection as well as disposal business led to top-line growth year over year. The business contributed $160 million of incremental revenues. This was partially offset by a decrease in revenues from the recycling line of business, which declined by $77 million on a year-over-year basis.
Revenues by Segment
The Collection segment recorded revenues of $2.3 billion, up 3.2% from the prior-year quarter. Landfill segment’s top-line increased to 8.9% to $805 million. While total revenues from the Transfer segment were up 2.5% to $375 million, the same from the Recycling segment was down 16.1% to $312 million. Other businesses’ revenues totaled $427 million, up 6.8% year over year.
Operating Performance
Operating EBITDA was $955 million up 7.8% from the year-earlier quarter. As a percentage of revenues, operating expenses were 62.2% compared with 63.0% in the year-ago quarter. SG&A expenses, as a percentage of revenues, were 10.6% compared with 11.3% in the prior-year quarter.
Balance Sheet and Cash Flow
Cash and cash equivalents balance at the end of the first quarter was $52 million compared with $22 million at the end of the fourth quarter of 2017. Long-term debt was $8.9 billion compared with $8.8 billion in the prior quarter.
In the reported quarter, net cash provided by operating activities was $809 million than $790 million in the fourth quarter. Free cash flow was $423 million compared with $342 million in the previous quarter. The company paid dividends worth $206 million and repurchased shares of $250 million in the quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
At this time, WM has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, WM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Waste Management (WM) Down 1.4% Since its Last Earnings Report?
It has been about a month since the last earnings report for Waste Management, Inc. (WM - Free Report) . Shares have lost about 1.4% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is WM due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
First-Quarter Results
Waste Management, Inc. (WM - Free Report) reported mixed first-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
The company’s earnings per share of 91 cents topped the Zacks Consensus Estimate by 11% and improved 35.8% year over year. Total revenues came in at $3.5 billion missing the consensus mark by 1.2%. However, the top line increased 2.1% on a year-over-year basis.
Strong yield and volume growth in the company’s collection as well as disposal business led to top-line growth year over year. The business contributed $160 million of incremental revenues. This was partially offset by a decrease in revenues from the recycling line of business, which declined by $77 million on a year-over-year basis.
Revenues by Segment
The Collection segment recorded revenues of $2.3 billion, up 3.2% from the prior-year quarter. Landfill segment’s top-line increased to 8.9% to $805 million. While total revenues from the Transfer segment were up 2.5% to $375 million, the same from the Recycling segment was down 16.1% to $312 million. Other businesses’ revenues totaled $427 million, up 6.8% year over year.
Operating Performance
Operating EBITDA was $955 million up 7.8% from the year-earlier quarter. As a percentage of revenues, operating expenses were 62.2% compared with 63.0% in the year-ago quarter. SG&A expenses, as a percentage of revenues, were 10.6% compared with 11.3% in the prior-year quarter.
Balance Sheet and Cash Flow
Cash and cash equivalents balance at the end of the first quarter was $52 million compared with $22 million at the end of the fourth quarter of 2017. Long-term debt was $8.9 billion compared with $8.8 billion in the prior quarter.
In the reported quarter, net cash provided by operating activities was $809 million than $790 million in the fourth quarter. Free cash flow was $423 million compared with $342 million in the previous quarter. The company paid dividends worth $206 million and repurchased shares of $250 million in the quarter.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter.
Waste Management, Inc. Price and Consensus
Waste Management, Inc. Price and Consensus | Waste Management, Inc. Quote
VGM Scores
At this time, WM has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. Notably, WM has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.