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Why Is Waste Management (WM) Up 4.7% Since Last Earnings Report?
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A month has gone by since the last earnings report for Waste Management (WM - Free Report) . Shares have added about 4.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Waste Management Beats Q3 Earnings Estimates
Waste Management Inc. reported mixed third-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Adjusted earnings per share of $1.63 surpassed the Zacks Consensus Estimate by 1.2% and improved 4.5% year over year. Total revenues of $5.2 billion missed the consensus estimate by 1.2% but increased 2.4% year over year.
Quarterly Numbers in Detail
The Collection segment recorded revenues of $3.51 billion, up 4.8% from the prior-year quarter’s figure but missed our estimate of $3.54 billion. The Landfill segment’s top line grew 5% year over year to $1.26 billion, beating our estimate of $1.22 billion. Total revenues in the Transfer segment were up 5.7% to $594 million in comparison to our expectation of $597.3 million.
The Recycling segment’s revenues dropped 12.9% to $366 million and missed our estimate of $395.4 million. Other businesses’ revenues totaled $678 million, up 10.4% year over year.
Adjusted operating EBITDA of $1.54 billion, which matched our estimate, increased 3.5% from the year-ago quarter’s level. Adjusted operating EBITDA margin increased 100 basis points to 29.6% from the prior-year quarter.
Balance Sheet and Cash Flow
Waste Management exited third-quarter 2023 with cash and cash equivalents of $150 million compared with $144 million at the end of the prior quarter. Long-term debt (less current portion) was $15.13 billion compared with $14.86 billion at the end of the prior quarter.
WM generated $1.26 billion in cash from operating activities in the reported quarter, while capital expenditures were $493 million. Free cash flow was $612 million.
In the third quarter of 2023, a total of $653 million was distributed to shareholders, comprising $283 million in cash dividends and $370 million in share repurchases.
Reaffirming 2023 Outlook
Total revenue growth is expected to be between 3.25% and 4.25%. Adjusted operating EBITDA is expected to be in the range of $5.775-$5.875 billion. Free cash flow is estimated to be between $2.575 billion and $2.675 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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 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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Why Is Waste Management (WM) Up 4.7% Since Last Earnings Report?
A month has gone by since the last earnings report for Waste Management (WM - Free Report) . Shares have added about 4.7% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Waste Management Beats Q3 Earnings Estimates
Waste Management Inc. reported mixed third-quarter 2023 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Adjusted earnings per share of $1.63 surpassed the Zacks Consensus Estimate by 1.2% and improved 4.5% year over year. Total revenues of $5.2 billion missed the consensus estimate by 1.2% but increased 2.4% year over year.
Quarterly Numbers in Detail
The Collection segment recorded revenues of $3.51 billion, up 4.8% from the prior-year quarter’s figure but missed our estimate of $3.54 billion. The Landfill segment’s top line grew 5% year over year to $1.26 billion, beating our estimate of $1.22 billion. Total revenues in the Transfer segment were up 5.7% to $594 million in comparison to our expectation of $597.3 million.
The Recycling segment’s revenues dropped 12.9% to $366 million and missed our estimate of $395.4 million. Other businesses’ revenues totaled $678 million, up 10.4% year over year.
Adjusted operating EBITDA of $1.54 billion, which matched our estimate, increased 3.5% from the year-ago quarter’s level. Adjusted operating EBITDA margin increased 100 basis points to 29.6% from the prior-year quarter.
Balance Sheet and Cash Flow
Waste Management exited third-quarter 2023 with cash and cash equivalents of $150 million compared with $144 million at the end of the prior quarter. Long-term debt (less current portion) was $15.13 billion compared with $14.86 billion at the end of the prior quarter.
WM generated $1.26 billion in cash from operating activities in the reported quarter, while capital expenditures were $493 million. Free cash flow was $612 million.
In the third quarter of 2023, a total of $653 million was distributed to shareholders, comprising $283 million in cash dividends and $370 million in share repurchases.
Reaffirming 2023 Outlook
Total revenue growth is expected to be between 3.25% and 4.25%. Adjusted operating EBITDA is expected to be in the range of $5.775-$5.875 billion. Free cash flow is estimated to be between $2.575 billion and $2.675 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
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 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.