Waste Management, Inc. 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 at 18.3% and 9.5%, respectively.
WM thrives on Resilience, Growth and Innovation
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. WM’s robust waste collection, recycling, and disposal infrastructure creates a steady revenue stream, making it a dependable investment option during market fluctuations.
Additionally, WM has embraced sustainability initiatives and innovation, such as converting landfill gas into renewable energy, which solidifies its growth prospects and positions it as a leader in the green economy. These efforts align with global shifts toward environmentally responsible practices, attracting ESG-focused investors. Its steady financial performance appeals to risk-averse investors looking for long-term stable returns. WM's revenues and operating income have both grown at a compound annual growth rate of 5.7% from 2019 to 2023.
Waste Management, Inc. Revenue (Quarterly)
Waste Management, Inc. revenue-quarterly | Waste Management, Inc. Quote
WM's focus on pricing and cost control is key to maintaining healthy profit margins. By carefully managing expenses, optimizing routes and improving operational processes, the company reduces unnecessary costs while providing high-quality services. This approach also ensures that price adjustments are justified and aligned with market demand, protecting margins even in fluctuating economic conditions. WM emphasizes enhancements in service delivery and operational efficiency. By integrating modern technology and process improvements, the company reduces costs and boosts service reliability and customer satisfaction.
Waste Management recently acquired Stericycle. The company 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 adds complementary business platforms to enhance WM’s comprehensive waste and environmental solutions.
Waste Management has demonstrated a remarkable commitment to rewarding its shareholders, maintaining a consistent dividend payment record since 1998. This consistency has continued despite fluctuations in the company’s cash position, underscoring its dedication to creating long-term value for investors. The company has paid $970 million, $1.1 billion, and $1.14 billion in dividends during 2021, 2022 and 2023, respectively.
A Risk for WM
WM's significant short-term debt relative to its cash reserves weakens its liquidity position. At the end of the third quarter of 2024, the company reported a current ratio of 0.89, aligning with the industry's average of 0.93. A current ratio below 1 oftensuggests that a company may not be well-positioned to meet its short-term obligations without difficulty.
Zacks Rank and Stocks to Consider
WM currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Business Services sector are Climb Global Solutions CLMB and Parsons PSN.
Climb Global Solutions flaunts a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CLMB has a long-term earnings growth expectation of 16%. It delivered a trailing four-quarter earnings surprise of 51.1%, on average.
Parsons sports a Zacks Rank of 1 at present. It has a long-term earnings growth expectation of 18.6%. PSN delivered a trailing four-quarter earnings surprise of 17.5%, on average.
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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.
