Waste Management (NYSE:WM) stock was down as much as 5% earlier on Thursday as the company was downgraded by a reputable investment analyst.
Stifel downgraded the Houston, Texas-based waste management business’ stock from a buy to a neutral, leading to the sell-off. The firm said that the downgrade was not so much related to the company’s core trash collecting business, as its fundamentals remain strong, the analyst said.
Instead, Stifel said the downgrade was the result of weakening prices for recycled paper as WM’s recycling business. The firm added that “wet weather” also played a role in its projection that the company’s results will not be as strong as Stifel had previously believed it to be.
All in all, Waste Management’s stock is down a touch above 2.5% today, but that only tells part of the tale of the company’s year as shares have gained 24.5% over the past year. This amount is stronger than the sub-10% performance of the S&P 500.
However, there is reason for concern as the company’s stock is trading roughly 22.5 times its earnings, which is a high price when taking into account that stocks do not usually grow more than 10% annually over the next five years.
In 2019 alone, Waste Management shares have increased about 16%, now trading at $102.93 per share. The company was founded in 1971 and is currently being spearheaded by CEO James C. Fish Jr.