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Waste Management Hits 52-Week High on Pricing Discipline
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Shares of Waste Management, Inc. (WM - Free Report) scaled a 52-week high of $76.33 during yesterday’s trading session, before closing a notch lower at $75.53. Barring minor hiccups, Waste Management’s share price has steadily been on an uptrend since mid-May. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectation of 9.5%.
Growth Drivers
Waste Management reported relatively healthy second-quarter 2017 results with net income of $362 million or 81 cents per share compared with $287 million or 64 cents per share in the year-ago quarter. The year-over-year increase in earnings was primarily driven by higher revenues.
Revenues for the reported quarter improved to $3,677 million from $3,425 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 recycling business.
Waste Management is successfully executing its initiatives to refocus on core business activities and instill price and cost discipline to achieve better margins. At the same time, the company aims to improve customer retention by providing better service and higher value solutions. Waste Management's successful cost-reduction initiatives have further helped it achieve remarkable gross margin expansion and EBITDA (earnings before interest, tax, depreciation and amortization) growth over the quarters.
In addition, Waste Management plans to return significant cash to shareholders through healthy dividends and share repurchases in the future. A steady dividend payment policy is part of Waste Management’s long-term strategy of providing attractive risk-adjusted returns to its stockholders. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to execute its growth strategy. Furthermore, decent dividend increases at periodic intervals have been one of the company’s most attractive features.
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. For the third quarter, the company expects to repurchase $500 million shares.
All these measures probably raised investor confidence and drove its shares to a new 52-week high.
RPX Corporation has beaten earnings estimates thrice in the trailing four quarters with a positive surprise of 45.7%.
SPS Commerce has a long-term earnings growth expectation of 25%. It has beaten earnings estimates in each of the trailing four quarters with a positive surprise of 139.9%.
Healthcare Services Group has a long-term earnings growth expectation of 11%.
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really takes off.
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Waste Management Hits 52-Week High on Pricing Discipline
Shares of Waste Management, Inc. (WM - Free Report) scaled a 52-week high of $76.33 during yesterday’s trading session, before closing a notch lower at $75.53. Barring minor hiccups, Waste Management’s share price has steadily been on an uptrend since mid-May. This Zacks Rank #3 (Hold) stock has the potential for further price appreciation with long-term earnings growth expectation of 9.5%.
Growth Drivers
Waste Management reported relatively healthy second-quarter 2017 results with net income of $362 million or 81 cents per share compared with $287 million or 64 cents per share in the year-ago quarter. The year-over-year increase in earnings was primarily driven by higher revenues.
Revenues for the reported quarter improved to $3,677 million from $3,425 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 recycling business.
Waste Management is successfully executing its initiatives to refocus on core business activities and instill price and cost discipline to achieve better margins. At the same time, the company aims to improve customer retention by providing better service and higher value solutions. Waste Management's successful cost-reduction initiatives have further helped it achieve remarkable gross margin expansion and EBITDA (earnings before interest, tax, depreciation and amortization) growth over the quarters.
Waste Management, Inc. Price and Consensus
Waste Management, Inc. Price and Consensus | Waste Management, Inc. Quote
In addition, Waste Management plans to return significant cash to shareholders through healthy dividends and share repurchases in the future. A steady dividend payment policy is part of Waste Management’s long-term strategy of providing attractive risk-adjusted returns to its stockholders. The company’s investment strategy takes a holistic view of the rapidly evolving market and deploys a dynamic capital allocation approach to execute its growth strategy. Furthermore, decent dividend increases at periodic intervals have been one of the company’s most attractive features.
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. For the third quarter, the company expects to repurchase $500 million shares.
All these measures probably raised investor confidence and drove its shares to a new 52-week high.
Stocks to Consider
Better-ranked stocks in the industry include RPX Corporation , SPS Commerce, Inc. (SPSC - Free Report) and Healthcare Services Group, Inc. (HCSG - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RPX Corporation has beaten earnings estimates thrice in the trailing four quarters with a positive surprise of 45.7%.
SPS Commerce has a long-term earnings growth expectation of 25%. It has beaten earnings estimates in each of the trailing four quarters with a positive surprise of 139.9%.
Healthcare Services Group has a long-term earnings growth expectation of 11%.
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really takes off.
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