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Prospects of Waste Removal Services Bright Amid Coronavirus
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Companies in the Zacks Waste Removal Services industry are engaged in the collection, transportation, treatment, disposal, inspection and regulation of any form of waste. The companies serve residential, municipal, commercial and industrial customers in the United States and internationally.
Here are the three major industry themes:
The industry has witnessed growth in income and cash flow over the past few years, enabling most players to pursue acquisitions and other investments. Per a report, the global waste management market is expected to reach $530 billion by 2025 from $330.6 billion in 2017, witnessing a CAGR of 6% from 2018 to 2025.
The coronavirus outbreak has necessitated the proper disposal of trash. In fact, waste management companies are at an advantage in situations such as the recent one as healthcare officials have to dispose of used masks, gloves, suits, syringes and other medical equipment properly to curb the spread of infection. Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping are also expected to aid the industry.
Growing adoption of recycling techniques, development of technologies and advanced waste collection solutions are key trends within the industry. Recycling remains a major growth area, with most industry players undertaking municipal solid waste and non-hazardous industrial waste recycling measures. Rising environmental concerns, rapid industrialization, increase in population and an expected increase in non-hazardous waste as a result of rapid economic growth should enhance business opportunities for waste management companies.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #63. This rank places it in the top 25% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that investors can buy or retain given their growth prospects, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Underperforms Sector and S&P 500
The Zacks Waste Removal Services industry has underperformed the broader Zacks Business Services sector as well as the Zacks S&P 500 composite over the past year.
The industry has declined 19.4% over this period compared with 1.4% decline of the broader sector. In contrast, the Zacks S&P 500 composite has risen 7% in the said time frame.
One-Year Price Performance
Industry’s Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing waste removal services stocks because of their high debt levels, the industry is currently trading at 10.06X compared with the S&P 500’s 11.95X and the sector’s 12.47X.
Over the past five years, the industry has traded as high as 12.32X, as low as 8.61X and at the median of 10.32X, as the charts below show.
EV/EBITDA Ratio
Bottom Line
Waste management companies are at an advantage currently with proper disposal of medical waste being a major concern for several countries across the globe amid coronavirus outbreak. Government initiatives for sustainable waste management; increasing environmental awareness, rising population, rapid industrialization and urbanization and growing adoption of advanced waste collection solutions are other positives, which should continue to drive demand.
Republic Services, Inc. (RSG - Free Report) : This Arizona-based company provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services to small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico.
The Zacks Consensus Estimate for its current-year EPS has improved 3.2% in the past 60 days.
Price and Consensus: RSG
Waste Management, Inc. (WM - Free Report) : This Texas-based company provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America.
The Zacks Consensus Estimate for its current-year EPS has improved 2.5% in the past 60 days.
Price and Consensus: WM
Advanced Disposal Services, Inc. : This Florida-based company provides non-hazardous solid waste collection, transfer, recycling, and disposal services.
The Zacks Consensus Estimate for current-year EPS has moved up 62.5% in the past 60 days.
Price and Consensus: ADSW
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Prospects of Waste Removal Services Bright Amid Coronavirus
Companies in the Zacks Waste Removal Services industry are engaged in the collection, transportation, treatment, disposal, inspection and regulation of any form of waste. The companies serve residential, municipal, commercial and industrial customers in the United States and internationally.
Here are the three major industry themes:
The industry has witnessed growth in income and cash flow over the past few years, enabling most players to pursue acquisitions and other investments. Per a report, the global waste management market is expected to reach $530 billion by 2025 from $330.6 billion in 2017, witnessing a CAGR of 6% from 2018 to 2025.
The coronavirus outbreak has necessitated the proper disposal of trash. In fact, waste management companies are at an advantage in situations such as the recent one as healthcare officials have to dispose of used masks, gloves, suits, syringes and other medical equipment properly to curb the spread of infection. Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping are also expected to aid the industry.
Growing adoption of recycling techniques, development of technologies and advanced waste collection solutions are key trends within the industry. Recycling remains a major growth area, with most industry players undertaking municipal solid waste and non-hazardous industrial waste recycling measures. Rising environmental concerns, rapid industrialization, increase in population and an expected increase in non-hazardous waste as a result of rapid economic growth should enhance business opportunities for waste management companies.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #63. This rank places it in the top 25% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that investors can buy or retain given their growth prospects, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry Underperforms Sector and S&P 500
The Zacks Waste Removal Services industry has underperformed the broader Zacks Business Services sector as well as the Zacks S&P 500 composite over the past year.
The industry has declined 19.4% over this period compared with 1.4% decline of the broader sector. In contrast, the Zacks S&P 500 composite has risen 7% in the said time frame.
One-Year Price Performance
Industry’s Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing waste removal services stocks because of their high debt levels, the industry is currently trading at 10.06X compared with the S&P 500’s 11.95X and the sector’s 12.47X.
Over the past five years, the industry has traded as high as 12.32X, as low as 8.61X and at the median of 10.32X, as the charts below show.
EV/EBITDA Ratio
Bottom Line
Waste management companies are at an advantage currently with proper disposal of medical waste being a major concern for several countries across the globe amid coronavirus outbreak. Government initiatives for sustainable waste management; increasing environmental awareness, rising population, rapid industrialization and urbanization and growing adoption of advanced waste collection solutions are other positives, which should continue to drive demand.
We now discuss three stocks from the Zacks Waste Removal Services universe, with the first one carrying a Zacks Rank #2 (Buy) and the rest carrying a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Republic Services, Inc. (RSG - Free Report) : This Arizona-based company provides non-hazardous solid waste collection, transfer, recycling, disposal, and energy services to small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico.
The Zacks Consensus Estimate for its current-year EPS has improved 3.2% in the past 60 days.
Price and Consensus: RSG
Waste Management, Inc. (WM - Free Report) : This Texas-based company provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America.
The Zacks Consensus Estimate for its current-year EPS has improved 2.5% in the past 60 days.
Price and Consensus: WM
Advanced Disposal Services, Inc. : This Florida-based company provides non-hazardous solid waste collection, transfer, recycling, and disposal services.
The Zacks Consensus Estimate for current-year EPS has moved up 62.5% in the past 60 days.
Price and Consensus: ADSW
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>