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Waste Management (WM) Stock Up 32.1% Year to Date: Here's Why
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Shares of Waste Management, Inc. (WM - Free Report) have charted a solid trajectory in recent times, appreciating 32.1% so far this year, much ahead of 12.6% growth of the industry it belongs to and 21.8% surge of the Zacks S&P 500 composite index.
Image Source: Zacks Investment Research
Let’s delve into factors that have contributed to the company’s outperformance.
Upbeat Fiscal 2021 Guidance
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.
Consecutive Earnings & Revenue Beat
Waste Management came up with better-than-expected earnings and revenue performance in the last four quarters. While the company’s top line is expected to have benefited from acquisition revenues and growth from yield, the bottom line is likely to have gained from operational efficiency.
Shareholder-Friendly Moves
Waste Management has a dominant market capitalization, and a steady dividend as well as share-repurchase policy. In 2020, 2019 and 2018, the company repurchased shares worth $402 million, $248 million and $1.004 billion, respectively. It paid $927 million, $876 million and $802 million in dividends during 2020, 2019 and 2018, respectively. The company plans to return significant cash to shareholders through healthy dividends and share repurchases in the future as well.
Such moves indicate Waste Management’s commitment to create value for shareholders and underline its confidence in its business.
Image: Bigstock
Waste Management (WM) Stock Up 32.1% Year to Date: Here's Why
Shares of Waste Management, Inc. (WM - Free Report) have charted a solid trajectory in recent times, appreciating 32.1% so far this year, much ahead of 12.6% growth of the industry it belongs to and 21.8% surge of the Zacks S&P 500 composite index.
Image Source: Zacks Investment Research
Let’s delve into factors that have contributed to the company’s outperformance.
Upbeat Fiscal 2021 Guidance
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.
Consecutive Earnings & Revenue Beat
Waste Management came up with better-than-expected earnings and revenue performance in the last four quarters. While the company’s top line is expected to have benefited from acquisition revenues and growth from yield, the bottom line is likely to have gained from operational efficiency.
Shareholder-Friendly Moves
Waste Management has a dominant market capitalization, and a steady dividend as well as share-repurchase policy. In 2020, 2019 and 2018, the company repurchased shares worth $402 million, $248 million and $1.004 billion, respectively. It paid $927 million, $876 million and $802 million in dividends during 2020, 2019 and 2018, respectively. The company plans to return significant cash to shareholders through healthy dividends and share repurchases in the future as well.
Such moves indicate Waste Management’s commitment to create value for shareholders and underline its confidence in its business.
Zacks Rank and Stocks to Consider
Waste Management currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the broader Zacks Business Services sector are Equifax (EFX - Free Report) , BGSF Inc. (BGSF - Free Report) and Avis Budget (CAR - Free Report) , each carrying a Zacks Rank #2 (Buy) as well.
The long-term expected earnings per share (three to five years) growth rate for Equifax, BGSF and Avis Budget is 15.2%, 20% and 57.2%, respectively.