Waste Management, Inc. (WM - Free Report) reported strong fourth-quarter 2017 results with healthy year-over-year increase in revenues and earnings.
Adjusted earnings for the quarter were 85 cents per share compared with 75 cents in the year-earlier quarter. The bottom line surpassed the Zacks Consensus Estimate of 83 cents. The year-over-year increase in adjusted earnings was aided by a healthy rise in revenues despite rise in operating expenses. The company reported adjusted earnings of $3.22 per share for full-year 2017 compared with $2.91 in 2016.
GAAP earnings for the quarter were $903 million or $2.06 per share compared with $335 million or 75 cents per share in the year-ago quarter.
Total revenues came in at $3,652 million compared with $3,460 million in the year-ago quarter. It surpassed the Zacks Consensus Estimate of $3,565 million. The increase was primarily driven by strong yield and volume growth in the Collection and Disposal business. Revenues for 2017 were $14,485 million compared with $13,609 million in 2016.
The Collection segment recorded revenues of $2,352 million, up from $2,224 million in the prior-year quarter. Landfill segment’s top line increased to $883 million from $780 million. Total revenues from the Transfer segment increased to $399 million from $378 million while that from Recycling was $310 million compared with $338 million in the prior-year quarter. Revenues from Other businesses were $433 million compared with $414 million in the fourth quarter of 2016.
Waste Management, Inc. Price, Consensus and EPS Surprise
Adjusted operating EBITDA was $1,020 million compared with $930 million in the year-earlier quarter. Adjusted operating EBITDA margin was 27.9% for the quarter with margin expansion of 100 basis points.
Balance Sheet and Cash Flow
As of Dec 31, 2017, Waste Management had $22 million in cash and cash equivalents compared with $32 million in the prior-year period. Long-term debt was $8,752 million compared with $8,893 million a year ago. For 2017, the company generated $3,180 million of cash from operating activities compared with $3,006 million in 2016. Free cash flow for the year was $1,770 million compared with $1,710 million in the prior year.
Concurrent with the earnings release, the company provided its outlook for 2018. It expects internal revenues from collection and disposal business to grow minimum 2% while that from volume are expected lie between 2% and 2.2%. Free cash flow for 2018 is expected to be between $1.95 billion and $2.05 billion. Adjusted earnings are likely to be between $3.97 and $4.05 per share.
Zacks Rank & Other Stocks to Consider
Waste Management has a Zacks Rank #2 (Buy). Other stocks in the industry worth considering include Republic Services, Inc. (RSG - Free Report) , Intertek Group plc and S&P Global Inc. (SPGI - Free Report) each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Republic Services has an expected long-term earnings growth rate of 10.2%. It exceeded estimates in each of the trailing four quarters with an average beat of 5.1%.
Intertek has an expected long-term earnings growth rate of 12%.
S&P Global has an expected long-term earnings growth rate of 12.5%. It exceeded estimates in each of the trailing four quarters with an average beat of 12.8%.
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