A prudent 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 bull run.
Waste Management, Inc. (NYSE:WM) is a waste removal services stock that has performed well in 2018 and has the potential to sustain the momentum in the near term.
What Makes it an Attractive Pick?
An Outperformer: Shares of Waste Management have gained 3.4% in the past year against 0.9% decline of the industry it belongs to and 7.6% decline of the Zacks S&P 500 composite.
Solid Rank & VGM Score: Waste Management currently carries a Zacks Rank #2 (Buy) and has a 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. 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: The direction of earnings estimate revisions serves as an important pointer when it comes to the price of a stock. The Zacks Consensus Estimate for fourth-quarter earnings has moved up 1.9% over the past 90 days. The same for 2019 has moved up 0.5%.
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 average positive earnings surprise of 4.5%.
Strong Growth Prospects: The Zacks Consensus Estimate for fourth-quarter earnings is pegged at $1.07, indicating year-over-year growth of 25.9%. Moreover, earnings are expected to register 7.1% growth in 2019. The stock has an expected long-term (three to five years) earnings per share growth rate of 12.3%.
Driving Factors: Waste Management continues to execute its core operating objectives of focused differentiation and continuous improvement, and instill price and cost discipline to achieve better margins. Focused differentiation through capitalization of extensive assets ensures profitable growth and offers competitive advantages. Strong performance in the company’s solid waste business continues to boost cash and earnings. Waste Management expects yield momentum to continue in its solid waste lines of business.
The company's successful cost-reduction initiatives have helped it in accomplishing remarkable gross margin expansion and EBITDA growth over the quarters.Acquisitions of Anderson Rubbish Disposal and Moorpark Rubbish Disposal are helping it to streamline existing operations.
Waste Management is focused on maximizing return on disposal network. A strong economy and benefits of volumes from third-party haulers that select the company’s close end disposal sites lead to higher volume being disposed at its facilities. The company is expected to leverage logistical benefits of its disposal network and increase returns on large investment in the network.
Other Stocks to Consider
Other top-ranked stocks in the broader Zacks Business Services sector include Republic Services (NYSE:RSG) , Waste Connections (NYSE:WCN) and Navigant Consulting (NYSE:NCI) , each carrying a Zacks Rank #2. Long-term expected EPS (three to five years) growth rate for Republic Services, Waste Connections and Navigant is 10.7%, 11.7% and 13.5%, respectively.
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Navigant Consulting, Inc. (NCI): Free Stock Analysis Report
Republic Services, Inc. (RSG): Free Stock Analysis Report
Waste Management, Inc. (WM): Free Stock Analysis Report
Waste Connections, Inc. (WCN): Free Stock Analysis Report
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Zacks Investment Research