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Cash Position Aids Waste Management (WM), Debt Load Ails

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Waste Management, Inc. (WM - Free Report) is currently benefiting from strong liquidity, and advanced waste collection and recycling techniques. However, high debt is worrisome.

WM’s second-quarter 2022 adjusted earnings per share (excluding 3 cents from non-recurring items) of $1.44 beat the Zacks Consensus Estimate by 5.9% and improved 13.4% year over year. Total revenues of $5.03 billion beat the consensus estimate by 3.8% and increased 12.3% year over year.

Shares of WM have inched up 4.4% in the past year against a 4.6% fall of the industry it belongs to.

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How is WM Faring?

The waste management industry stands to benefit from the growing adoption of advanced waste collection and recycling techniques. Increasing environmental concerns, rapid industrialization, higher population and an expected increase in non-hazardous waste as a result of rapid economic growth are expected to enhance business opportunities for waste management.

Waste Management's current ratio at the end of second-quarter 2022 was pegged at 1.07, higher than the prior-year quarter’s current ratio of 1.01. Increasing current ratio bodes well as it indicates that WM will have no problem meeting its short-term debt obligations.

WM’s long-term debt outstanding surpasses its liquidity capacity. Cash and cash equivalents balance at the end of second-quarter 2022 was $894 million compared with the long-term debt level of $14 billion.

Zacks Rank & Other Key Picks

Waste Management currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors interested in the broader Zacks Business Services sector can also consider stocks like Avis Budget Group, Inc. (CAR - Free Report) , Genpact Limited (G - Free Report) and H&R Block, Inc. (HRB - Free Report) .

Avis Budget sports a Zacks Rank #1 (Strong Buy) at present. CAR has an earnings growth rate of 108.4% for 2022.

Avis Budget delivered a trailing four-quarter earnings surprise of 69.5%, on average.  

Genpact carries a Zacks Rank of 2 at present. G has a long-term earnings growth expectation of 12.3%.

Genpact delivered a trailing four-quarter earnings surprise of 10.1%, on average.  

H&R Block flaunts a Zacks Rank of 1, currently. HRB has a long-term earnings growth expectation of 12.5%.

HRB delivered a trailing four-quarter earnings surprise of 19.2%, on average.
 

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