It has been about a month since the last earnings report for Waste Management (WM). Shares have added about 3.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Waste Management due for a pullback? 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 catalysts.
Waste Management Beats Q3 Earnings Estimates
Waste Management reported impressive third-quarter 2024 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
WM’s quarterly adjusted earnings of $1.96 per share beat the consensus mark by 5.4% and gained 20.3% on a year-over-year basis. Total revenues of $5.6 billion surpassed the consensus mark by 2% and grew 7.9% from the year-ago quarter.
WM’s Quarterly Numbers in Detail
The Collection segment recorded revenues of $4.3 billion, growing 4.7% from the year-ago quarter and outpacing our estimate of $4.1 billion. The Landfill segment’s top line increased 6.8% on a year-over-year basis to $1.3 billion and met our estimate. Total revenues in the Transfer segment increased 7.9% to $641 million and beat our expectation of $612.3 million. The Recycling Processing and Sales segment’s revenues increased 30.3% to $503 million and surpassed our projection of $443 million. The figures are before the alignment of intercompany adjustment.
The adjusted operating EBITDA was $1.7 billion, which beat our estimated $1.6 billion and rose 11% from the year-ago quarter. The adjusted operating EBITDA margin increased 90 basis points to 30.5% from the year-ago quarter and surpassed our projection of 30.1%.
Balance Sheet & Cash Flow of WM
Waste Management exited the third quarter of 2024 with cash and cash equivalents of $614 million compared with $172 million at the end of the preceding quarter. The long-term debt (less current portion) was $16 billion compared with the preceding quarter’s $16.5 billion.
WM generated $1.4 billion in cash from operating activities in the reported quarter, while capital expenditure was $781 million. The free cash flow was $618 million. In the third quarter of 2024, $301 million in cash dividends was distributed to shareholders.
Waste Management’s 2024 Outlook
The company anticipates 2024 revenues to grow 6%, which is greater than the higher end of the previous quarter’s guidance of 5.75%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
VGM Scores
At this time, Waste Management has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Waste Management has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Waste Management is part of the Zacks Waste Removal Services industry. Over the past month, Radius Recycling (RDUS), a stock from the same industry, has gained 13.4%. The company reported its results for the quarter ended August 2024 more than a month ago.
Radius Recycling reported revenues of $770.82 million in the last reported quarter, representing a year-over-year change of +7.4%. EPS of -$0.41 for the same period compares with $0.47 a year ago.
For the current quarter, Radius Recycling is expected to post a loss of $0.66 per share, indicating a change of -3.1% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Radius Recycling has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
