A wise investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock’s bullish run.
Waste Management, Inc. (WM - Free Report) is waste removal services stock that has performed extremely well so far this year and has the potential to carry the momentum forward. Therefore, if you haven’t taken advantage of the share price appreciation yet, it’s time you add the stock to your portfolio.
What Makes Waste Managementan Attractive Pick?
An Outperformer: A glimpse of the company’s price trend reveals that the stock has had an impressive run on the bourse on a year-over-year basis. Waste Management returned 15.9%, which compared favorably with the S&P 500’s gain of 10.8%.
Solid Rank & VGM Score: Waste Management has a Zacks Rank #2 (Buy) and a Value Growth Momentum Score (VGM Score) of B. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.You can see the complete list of today’s Zacks #1 Rank stocks here.
Northward Estimate Revisions: Four estimates for the current year moved north over the past 60 days versus one southward revisions, reflecting analysts’ confidence in the company. Over the same period, the Zacks Consensus Estimate for 2018 increased 8%.
Positive Earnings Surprise History: Waste Management has an impressive earnings surprise history. The company outpaced the consensus mark in three of the trailing four quarters, delivering a positive average earnings surprise of 0.9%.
Strong Growth Prospects: The Zacks Consensus Estimate for 2018 earnings is currently pegged at $4.04, reflecting year-over-year growth of 25.5%. In 2019, the metric is expected to increase 9.3%. The stock has long-term expected earnings per share growth rate of 10.9%.
Growth Factors: Waste Management is executing well on its initiatives to refocus on the core business activities, and instill price and cost discipline to achieve better margins. In the meantime, the company's successful cost-reduction initiatives have helped it in accomplishing remarkable gross margin expansion and EBITDA growth over the quarters. This momentum is expected to continue going forward.
Waste Management, Inc. Revenue (TTM)
Furthermore, the company provided a bullish outlook for 2018 backed by strong yield, volume, and cost performance in the fourth quarter. Adjusted earnings is expected to be in the range of $3.97-$4.05 per share. Free cash flow is projected to lie between $1.95 billion and $2.05 billion. Also, internal revenues from collection and disposal business are anticipated to grow minimum 2% while the same from volume is envisioned in the 2-2.2% band. Consequently, raising investor confidence in the stock.
The acquisition of Deffenbaugh Disposal is also helping the company to improve on its revenues. The buyout is expected to enable Waste Management to expand its geographic footprint as well and make a foray in the attractive market of Kansas City, where it has limited presence.
Moreover, Waste Management has a dominant market capitalization and a steady annual dividend policy. It plans to return significant cash to shareholders through healthy dividends and share repurchases in the quarters ahead. These initiatives should boost shareholders' returns in the long term. Meanwhile, the company expects yield momentum to continue in its solid waste lines of business in the forthcoming quarters.
Other Stocks to Consider
Some other top-ranked stocks in the broader Business Services sector include CRA International , FTI Consulting (FCN - Free Report) and NV5 Global (NVEE - Free Report) , each sporting a Zacks Rank of 1.
In the trailing four quarters, CRA International, FTI Consulting and NV5 Globalhave delivered a positive earnings surprise of 28%, 6.1% and 5.8%, respectively.
Zacks Editor-in-Chief Goes "All In" on This Stock
Full disclosure, Kevin Matras now has more of his own money in one particular stock than in any other. He believes in its short-term profit potential and also in its prospects to more than double by 2019. Today he reveals and explains his surprising move in a new Special Report.
Download it free >>