Waste and environmental services company Waste Management (NYSE:WM) just announced a major addition to its executive lineup. With a 4.2% dividend yield and a firm handhold on the nation’s garbage collection market, could one man’s trash be a treasure in your portfolio? Let’s find out.
With over $13 billion in annual sales, Waste Management is the second largest player in the Industrial Goods industry. Waste Management runs a network of over 350 collection operations, 350 transfer stations, 270 landfills, 130 recycling plants and 110 landfill gas projects. This company also stands apart in terms of its 4.2% dividend yield, which is second-highest in the industry.
Before the opening bell Thursday, Waste Management announced the appointment of James Fish as the company’s new chief financial officer (CFO). Fish, who is currently Senior Vice President of the Eastern Group, will follow Steven Preston after the company completes its financial reporting for the second quarter.
This company is currently scheduled to report earnings on July 26. Currently, the analyst community expects Waste Management to grow sales by 5.2% and earnings by 6%. By comparison, the rest of the Industrial Goods industry is headed toward 20% earnings growth — over triple what is forecast for Waste Management.
This company has a mixed history of topping earnings estimates; in the past quarter Waste Management missed the consensus estimate by 5%. Over the past three months, analysts have held their earnings estimate at 53 cents per share, so it doesn’t look like there will be a big upset to the upside or downside.
Before you buy any stock, you should always run it through my free Portfolio Grader ratings system. Over the past 12 months, this stock has wavered between a C-rated hold and a D-rated sell. What Waste Management has been struggling with lately has been its history of beating analyst earnings estimates, its sales growth, operating margin growth and earnings growth. In fact, the only real area of fundamental strength has been Waste Management’s return on equity. WM receives a C for its Fundamental Grade and a D for its Quantitative Grade because there is lackluster buying pressure for this stock.
Bottom Line: As of this posting, July 5, I consider WM a D-rated sell. While it’s exciting to see the company inject new talent into its management, there are still overarching problems with sales and earnings growth in the Industrial Goods industry, and Waste Management is no exception.