A month has gone by since the last earnings report for Waste Management (WM Quick QuoteWM - Free Report) . Shares have lost about 4% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Waste Management due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Waste Management Misses Q2 Earnings Estimates

Waste Management Inc. reported disappointing second-quarter 2023 results, wherein both earnings and revenues failed to surpass the respective Zacks Consensus Estimate.

Adjusted earnings per share of $1.51 missed the Zacks Consensus Estimate by 2%, and improved 4.9% year over year. Total revenues of $5.11 billion missed the Zacks Consensus Estimate by 1.8%, and increased 1.8% year over year.

Quarterly Numbers in Detail

The Collection segment recorded revenues of $3.45 billion, up 4.4% from the prior-year quarter’s figure but missed our estimate of $3.51 billion. The Landfill segment’s top line grew 5.9% year over year to $1.27 billion beating our estimate of $1.22 billion. Total revenues in the Transfer segment were up 5.6% to $585 million in comparison to our expectation of $572.2 million.

The Recycling segment’s revenues dropped 20.9% to $370 million missed our estimate of $417.9 million. Other businesses’ revenues totaled $653 million, up 9.6% year over year.

Adjusted operating EBITDA of $1.47 billion increased 3.5% from the year-ago quarter’s level. Adjusted operating EBITDA margin fell 60 basis points to 28.7% from the prior-year quarter. This compares to our expectation of $1.49 billion and 28.6%

Balance Sheet and Cash Flow

Waste Management exited second-quarter 2023 with cash and cash equivalents of $144 million compared with $257 million at the end of the prior quarter. Long-term debt (less current portion) was $14.86 billion compared with $15 billion at the end of the prior quarter.

WM generated $1.03 billion of cash from operating activities in the reported quarter, while capital expenditures were $676 million. Free cash flow was $545 million.

Revising 2023 Outlook

Total revenue growth is expected to be between 3.25% and 4.25%, down from the previous guidance of 4% and 5.5%.

Adjusted operating EBITDA is expected in the range of $5.775-$5.875 billion, decreased from $5.825-$5.975 billion.

Free cash flow is estimated to be between $2.575 billion and $2.675 billion. Lower than the prior guidance of $2.6-$2.7 billion.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Waste Management has an average Growth Score of C, though it is lagging a bit 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.