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Why Should You Hold on to Waste Management Stock for Now?
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Waste Management, Inc. (WM - Free Report) is a leading provider of environmental waste mitigation and remediation solutions in North America.
Headquartered in Houston, TX, Waste Managementis the largest provider of comprehensive waste management services in the country. The company provides collection, transfer, recycling and resource recovery, as well as disposal services to nearly 20 million 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.
Currently, the company carries a Zacks Rank #3 (Hold). Here’s why investors should hold on to the stock at present.
Sales/Assets Ratio (S/TA)
Currently, the company has a S/TA ratio of 0.65 which means that it gets 65 cents in sales for each dollar in assets (1.25 for the ratio = $1.25 in sales for each dollar in assets, 0.5 for the ratio = 50 cents in sales for each dollar in assets). Comparing this to the industry average ratio of 0.55 we can say that Waste Management is a bit more efficient than the industry at large.
Return on Equity (ROE)
Waste Management currently has a ROE of 24.18% whereas the industry’s ROE is 8%. The favorable ROE acts as growth driver for the company.
Earnings Estimate Revisions
Investors should also consider the positive trends on the estimates revision front. Analysts have been raising their estimates for Waste Management lately, and now the earnings picture is looking favorable for the company.
Over the past 90 days, the Zacks Consensus Estimate for the full year jumped from $3.16 to $3.17 per share today. Also, the current-quarter estimates have risen from 63 cents to 69 cents per share, over the same time period.
The company outperformed the Zacks categorized Waste Removal Services industry with an average loss of 1.5% compared with 1.6% decline for the latter, over the last one month.
Value Growth Momentum (VGM) Score
In aggregate, Waste Management currently has a Zacks VGM Score of ‘B’. This, along with some other key metrics makes the company a solid choice for investors.
Strategic Divestitures
Waste Management is executing well its initiatives to refocus on the core business activities and instill price and cost discipline to achieve better margins. The company aims to focus on improving customer retention by providing better service and higher value solutions. The acquisition of Deffenbaugh Disposal at an undisclosed price will further help the company to replace revenues lost from the divesture of Wheelabrator. At the same time, the transaction will enable Waste Management to extend its geographic footprint and foray into the attractive market of Kansas City, where it has limited presence. A steady stream of such accretive acquisitions is likely to drive earnings for the company in the future.
Bottom Line
Investors might want to hold on to the stock at present as it has pretty positive prospects of outperforming its peers in the near future.
Everi has a long-term earnings growth expectation of 20%.
CRA International surpassed earnings estimates thrice in the trailing four quarters with a positive surprise of 16.02%.
Advanced Disposal Services topped earnings estimates twice in the trailing four quarters with a positive surprise of 225%. It is currently trading at a forward P/E of 58.4x.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>.
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Why Should You Hold on to Waste Management Stock for Now?
Waste Management, Inc. (WM - Free Report) is a leading provider of environmental waste mitigation and remediation solutions in North America.
Headquartered in Houston, TX, Waste Managementis the largest provider of comprehensive waste management services in the country. The company provides collection, transfer, recycling and resource recovery, as well as disposal services to nearly 20 million 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.
Currently, the company carries a Zacks Rank #3 (Hold). Here’s why investors should hold on to the stock at present.
Sales/Assets Ratio (S/TA)
Currently, the company has a S/TA ratio of 0.65 which means that it gets 65 cents in sales for each dollar in assets (1.25 for the ratio = $1.25 in sales for each dollar in assets, 0.5 for the ratio = 50 cents in sales for each dollar in assets). Comparing this to the industry average ratio of 0.55 we can say that Waste Management is a bit more efficient than the industry at large.
Return on Equity (ROE)
Waste Management currently has a ROE of 24.18% whereas the industry’s ROE is 8%. The favorable ROE acts as growth driver for the company.
Earnings Estimate Revisions
Investors should also consider the positive trends on the estimates revision front. Analysts have been raising their estimates for Waste Management lately, and now the earnings picture is looking favorable for the company.
Over the past 90 days, the Zacks Consensus Estimate for the full year jumped from $3.16 to $3.17 per share today. Also, the current-quarter estimates have risen from 63 cents to 69 cents per share, over the same time period.
The company outperformed the Zacks categorized Waste Removal Services industry with an average loss of 1.5% compared with 1.6% decline for the latter, over the last one month.
Value Growth Momentum (VGM) Score
In aggregate, Waste Management currently has a Zacks VGM Score of ‘B’. This, along with some other key metrics makes the company a solid choice for investors.
Strategic Divestitures
Waste Management is executing well its initiatives to refocus on the core business activities and instill price and cost discipline to achieve better margins. The company aims to focus on improving customer retention by providing better service and higher value solutions. The acquisition of Deffenbaugh Disposal at an undisclosed price will further help the company to replace revenues lost from the divesture of Wheelabrator. At the same time, the transaction will enable Waste Management to extend its geographic footprint and foray into the attractive market of Kansas City, where it has limited presence. A steady stream of such accretive acquisitions is likely to drive earnings for the company in the future.
Bottom Line
Investors might want to hold on to the stock at present as it has pretty positive prospects of outperforming its peers in the near future.
Stocks to Consider
Some better-ranked stocks in the industry include Everi Holdings Inc. (EVRI - Free Report) , CRA International, Inc. (CRAI - Free Report) and Advanced Disposal Services, Inc. , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Everi has a long-term earnings growth expectation of 20%.
CRA International surpassed earnings estimates thrice in the trailing four quarters with a positive surprise of 16.02%.
Advanced Disposal Services topped earnings estimates twice in the trailing four quarters with a positive surprise of 225%. It is currently trading at a forward P/E of 58.4x.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>.