Headquartered in Houston, TX, Waste Management, Inc. (NYSE:WM) is a leading provider of comprehensive waste management services in North America.
Waste Management provides collection, transfer, recycling and resource recovery, as well as disposal services to residential, commercial, industrial and municipal customers. It is also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the U.S.
Let us have a look at the reasons that make the stock a must buy at the moment.
Solid Rank & VGM Score
Waste Management currently has a Zacks Rank #2 (Buy) and a Value Growth Momentum Score (VGM Score) of ‘B’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’ combined with a Zacks Rank #1 (Strong Buy) or #2, offer the best investment opportunities. Consequently, Waste Management appears to be a solid investment proposition at the moment.
Positive Estimate Revisions
Over the last three months, Waste Management’s current-year estimates increased from $3.17 to $3.18 per share while that for the next year increased from $3.41 to $3.44. With positive estimate revisions, investor sentiments clearly appear to be bullish on the stock.
Strong Price Performance
Waste Management’s shares have performed relatively better than the Zacks categorized Waste Removal Services industry with an average one-year return of 16.9% compared with 15.4% gain for the latter. Despite a challenging macroeconomic environment, Waste Management started 2017 on a positive note with strong first-quarter results, driven by healthy year-over-year increase in earnings and revenues.
GAAP earnings for the reported quarter were $298 million or 67 cents per share compared with $258 million or 58 cents per share in the year-earlier quarter. Net sales during the quarter were $3,440 million, up from $3,176 million in the year-ago quarter.
WM Moving Forward
Waste Management’s successful cost-reduction initiatives helped it in accomplishing remarkable gross margin expansion and EBITDA (earnings before interest, tax, depreciation and amortization) growth over the quarters.
The company is undertaking several steps to further boost its margins. With strong yield, volume, and cost performance in the first quarter, the company has reaffirmed its bullish guidance. It continues to expect 2017 adjusted earnings in the range of $3.14 to $3.18 per share. Free cash flow is expected between $1.5 billion and $1.6 billion.
We believe that such a bullish stance, along with its robust operating platform and an efficient management team will help in the execution of its strategic priorities and drive net asset value.
Advanced Disposal Services topped earnings estimates twice in the trailing four quarters with a stellar positive surprise of 227.8%.
CBIZ surpassed estimates twice in the trailing four quarters with an average positive earnings surprise of 18.4%.
Republic Services has a long-term earnings growth expectation of 9.2%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 3.6%.
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