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Waste Management (WM) Up 4.4% 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 4.4% 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 catalysts.

Waste Management Q4 Earnings & Revenues Surpass Estimates

Waste Management reported solid fourth-quarter 2021 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.26 beat the Zacks Consensus Estimate by 0.8% and improved 11.5% year over year. Total revenues of $4.68 billion beat the consensus estimate by 1.9% and increased 15% year over year.

Quarterly Numbers in Detail

The Collection segment recorded revenues of $3.01 billion, up 11.6% from the prior-year quarter’s figure. The Landfill segment’s top line grew 10.7% year over year to $1.06 billion. Total revenues in the Transfer segment were up 6.5% to $525 million. Recycling segment revenues increased 55.1% to $478 million. Other businesses’ revenues totaled $571 million, up 19.2% year over year.

Adjusted operating EBITDA of $1.25 billion increased 9.4% from the year-ago quarter’s level. Adjusted operating EBITDA margin fell to 26.7% from 28.1% in the prior-year quarter.

Adjusted operating income came in at $739 million, up 4.7% from the year-ago quarter. Adjusted operating income margin fell to 15.8% from 17.4% in the year-ago quarter.

Waste Management exited fourth-quarter 2021 with cash and cash equivalents of $118 million compared with $116 million at the end of the prior quarter. Long-term debt was $12.7 billion compared with $12.4 billion at the end of the prior quarter.

The company generated $991 million of cash from operating activities while capital expenditures were $774 million. Free cash flow was $243 million.

During the reported quarter, the company returned $590 million to shareholders, which includes $240 million through cash dividends and $350 million through share repurchases.

2022 Outlook

Waste Management has unveiled its outlook for 2022. Total revenue growth is expected to be 5.8% to 6.2%, which includes organic revenue growth of nearly 6% from the collection and disposal business. Adjusted operating EBITDA is expected to be between $5.325 and $5.425 billion. Free cash flow is estimated to be between $2.05 billion and $2.15 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Waste Management has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. 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 C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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