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Waste Management (WM) Q1 Earnings in Sync, View Reiterated
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Despite a challenging macroeconomic environment, Waste Management, Inc. (WM - Free Report) reported strong first-quarter 2017 results with GAAP net income of $298 million or 67 cents per share, compared with $258 million or 58 cents per share in the year-ago quarter. The year-over-year increase in earnings was primarily attributable to higher revenues.
Excluding non-recurring items, adjusted earnings for the reported quarter were $291 million or 66 cents per share, which matched the Zacks Consensus Estimate.
Quarter Details
Revenues for the reported quarter improved to $3,440 million from $3,176 million in the year-ago quarter. The year-over-year rise in revenues was driven by an increase in volume and yield in its collection and disposal business as well as the recycling business. Revenues exceeded the Zacks Consensus Estimate of $3,323 million.
Internal revenue growth from yield (for collection and disposal operations) was 2.0% in the reported quarter. Traditional solid waste internal revenue growth from volume was 1.9%. Total internal revenue growth from volume, which includes recycling and renewable energy, was 1.9%. Core price (including price increases and fees, other than the company’s fuel surcharge, net of rollbacks) was 5.1% in the reported quarter. Average recycling commodity prices improved 70% year over year.
Revenues from the company’s Collection business increased to $2,235 million in the reported quarter from $2,113 million in the year-ago quarter. Landfill revenues improved to $739 million from $707 million in the prior-year quarter. Recycling revenues increased to $372 million from $268 million, while Transfer revenues were up by $20 million to $366 million.
Waste Management, Inc. Price, Consensus and EPS Surprise
Cash and cash equivalents at quarter-end were $30 million, while long-term debt (less current portion) was $8,646 million. Net cash from operating activities for the quarter was $721 million compared with $732 million in the prior-year period. Capital expenditures in the quarter were $332 million, up from $317 million in the year-ago period.
Free cash flow was $396 million in first-quarter 2017, compared with $428 million in the year-earlier quarter. During the quarter, the company returned $194 million to its shareholders through dividend payments.
2017 Guidance Affirmed
With strong yield, volume, and cost performance, the company reiterated its 2017 guidance and continues to expect 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.
Stericycle has a long-term earnings growth expectation of 9.7% and has a positive earnings surprise of 2.28% in the trailing four quarters.
Waste Connections has a long-term earnings growth expectation of 15.8% and has a positive earnings surprise of 14.7% in the trailing four quarters.
US Ecology has a long-term earnings growth expectation of 5.0%.
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Waste Management (WM) Q1 Earnings in Sync, View Reiterated
Despite a challenging macroeconomic environment, Waste Management, Inc. (WM - Free Report) reported strong first-quarter 2017 results with GAAP net income of $298 million or 67 cents per share, compared with $258 million or 58 cents per share in the year-ago quarter. The year-over-year increase in earnings was primarily attributable to higher revenues.
Excluding non-recurring items, adjusted earnings for the reported quarter were $291 million or 66 cents per share, which matched the Zacks Consensus Estimate.
Quarter Details
Revenues for the reported quarter improved to $3,440 million from $3,176 million in the year-ago quarter. The year-over-year rise in revenues was driven by an increase in volume and yield in its collection and disposal business as well as the recycling business. Revenues exceeded the Zacks Consensus Estimate of $3,323 million.
Internal revenue growth from yield (for collection and disposal operations) was 2.0% in the reported quarter. Traditional solid waste internal revenue growth from volume was 1.9%. Total internal revenue growth from volume, which includes recycling and renewable energy, was 1.9%. Core price (including price increases and fees, other than the company’s fuel surcharge, net of rollbacks) was 5.1% in the reported quarter. Average recycling commodity prices improved 70% year over year.
Revenues from the company’s Collection business increased to $2,235 million in the reported quarter from $2,113 million in the year-ago quarter. Landfill revenues improved to $739 million from $707 million in the prior-year quarter. Recycling revenues increased to $372 million from $268 million, while Transfer revenues were up by $20 million to $366 million.
Waste Management, Inc. Price, Consensus and EPS Surprise
Waste Management, Inc. Price, Consensus and EPS Surprise | Waste Management, Inc. Quote
Balance Sheet & Cash Flow
Cash and cash equivalents at quarter-end were $30 million, while long-term debt (less current portion) was $8,646 million. Net cash from operating activities for the quarter was $721 million compared with $732 million in the prior-year period. Capital expenditures in the quarter were $332 million, up from $317 million in the year-ago period.
Free cash flow was $396 million in first-quarter 2017, compared with $428 million in the year-earlier quarter. During the quarter, the company returned $194 million to its shareholders through dividend payments.
2017 Guidance Affirmed
With strong yield, volume, and cost performance, the company reiterated its 2017 guidance and continues to expect 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.
Waste Management currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Stericycle, Inc. (SRCL - Free Report) , Waste Connections, Inc. (WCN - Free Report) and US Ecology, Inc. , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stericycle has a long-term earnings growth expectation of 9.7% and has a positive earnings surprise of 2.28% in the trailing four quarters.
Waste Connections has a long-term earnings growth expectation of 15.8% and has a positive earnings surprise of 14.7% in the trailing four quarters.
US Ecology has a long-term earnings growth expectation of 5.0%.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>