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Waste Management (WM) Up 4.9% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Waste Management (WM - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Waste Management due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Waste Management reported solid second-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of $1.27 beat the Zacks Consensus Estimate by 7.6% and improved 44.3% year over year. Total revenues of $4.48 billion beat the consensus estimate by 5.2% and increased 25.7% year over year.
In the reported quarter, the company witnessed $305 million of revenues from the acquisition of Advanced Disposal and $118 million of growth from yield.
Quarterly Numbers in Detail
The Collection segment recorded revenues of $2.92 billion, up 25.5% from the prior-year quarter’s figure. The Landfill segment’s top line grew 22.9% year over year to $1.08 billion. Total revenues in the Transfer segment were up 21.2% to $532 million. Recycling segment revenues increased 44.4% to $397 million. Other businesses’ revenues totaled $513 million, up 25.4% year over year.
Adjusted operating EBITDA of $1.31 billion increased 27.9% from the year-ago quarter’s level. Adjusted operating EBITDA margin rose to 29.3% from 28.8% in the prior-year quarter.
Adjusted operating income came in at $813 million, up 32.8% from the year-ago quarter. Adjusted operating income margin rose to 18.2% from 17.2% in the year-ago quarter.
Waste Management exited second-quarter 2021 with cash and cash equivalents of $148 million compared with $476 million at the end of the prior quarter. Long-term debt was $12.8 billion compared with $13.2 billion at the end of the prior quarter.
The company generated $1.04 billion of cash from operating activities while capital expenditures were $396 million. Free cash flow was $649 million.
During the reported quarter, the company returned $492 million to shareholders, which includes $242 million through cash dividends and $250 million through share repurchases.
2021 Outlook
Waste Management has raised its outlook for 2021. Total revenue growth is now expected to be 15.5% to 16% compared with the prior growth rate of 12.5% to 13%. Combined internal revenue growth from yield and volume in the collection and disposal business is expected to be 5.5% or higher. The growth rate was earlier expected to be 4.5% or higher. Adjusted operating EBITDA is now expected to be between $5 billion and $5.1 billion compared with the prior-guided range of $4.875-$4.975 billion. Free cash flow is now estimated to be between $2.5 billion and $2.6 billion compared with the prior-guided range of $2.325-$2.425 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Waste Management has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Waste Management has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Waste Management (WM) Up 4.9% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Waste Management (WM - Free Report) . Shares have added about 4.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Waste Management due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Waste Management Surpasses Q2 Earnings & Revenue Estimates
Waste Management reported solid second-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share of $1.27 beat the Zacks Consensus Estimate by 7.6% and improved 44.3% year over year. Total revenues of $4.48 billion beat the consensus estimate by 5.2% and increased 25.7% year over year.
In the reported quarter, the company witnessed $305 million of revenues from the acquisition of Advanced Disposal and $118 million of growth from yield.
Quarterly Numbers in Detail
The Collection segment recorded revenues of $2.92 billion, up 25.5% from the prior-year quarter’s figure. The Landfill segment’s top line grew 22.9% year over year to $1.08 billion. Total revenues in the Transfer segment were up 21.2% to $532 million. Recycling segment revenues increased 44.4% to $397 million. Other businesses’ revenues totaled $513 million, up 25.4% year over year.
Adjusted operating EBITDA of $1.31 billion increased 27.9% from the year-ago quarter’s level. Adjusted operating EBITDA margin rose to 29.3% from 28.8% in the prior-year quarter.
Adjusted operating income came in at $813 million, up 32.8% from the year-ago quarter. Adjusted operating income margin rose to 18.2% from 17.2% in the year-ago quarter.
Waste Management exited second-quarter 2021 with cash and cash equivalents of $148 million compared with $476 million at the end of the prior quarter. Long-term debt was $12.8 billion compared with $13.2 billion at the end of the prior quarter.
The company generated $1.04 billion of cash from operating activities while capital expenditures were $396 million. Free cash flow was $649 million.
During the reported quarter, the company returned $492 million to shareholders, which includes $242 million through cash dividends and $250 million through share repurchases.
2021 Outlook
Waste Management has raised its outlook for 2021. Total revenue growth is now expected to be 15.5% to 16% compared with the prior growth rate of 12.5% to 13%. Combined internal revenue growth from yield and volume in the collection and disposal business is expected to be 5.5% or higher. The growth rate was earlier expected to be 4.5% or higher. Adjusted operating EBITDA is now expected to be between $5 billion and $5.1 billion compared with the prior-guided range of $4.875-$4.975 billion. Free cash flow is now estimated to be between $2.5 billion and $2.6 billion compared with the prior-guided range of $2.325-$2.425 billion.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, Waste Management has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Waste Management has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.