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Reasons to Retain Waste Management (WM) in Your Portfolio

Waste Management, Inc. WM is currently benefiting from its core operating performance, steady shareholder-friendly measures and solid liquidity.

The company’s earnings and revenues for 2023 are expected to grow 8.9% and 4.8%, respectively. WM has a long-term (three to five years) expected earnings growth rate of 10.9%.

Factors Favoring WM

Being a leading provider of comprehensive waste management environmental services, WM is expected to continue benefiting from ongoing trends like increasing environmental concerns, rapid industrialization, increase in population and active government measures to reduce illegal dumping. The company’s top line increased 5.5% year over year in the fourth quarter of 2022.

Waste Management, Inc. Revenue (TTM)

Waste Management, Inc. Revenue (TTM)
Waste Management, Inc. Revenue (TTM)

Waste Management, Inc. revenue-ttm | Waste Management, Inc. Quote

Waste Management continues to execute core operating initiatives targeting focused differentiation and continuous improvement and instilling price and cost discipline to achieve better margins. While differentiation through capitalization of extensive assets ensures long-term profitable growth and competitive advantages, cost control, process improvement and enhancements to its digital platform help enhance service quality.

WM's current ratio at the end of fourth-quarter 2022 was pegged at 0.81, higher than the prior-year quarter’s current ratio of 0.75. An increase in the current ratio bodes well, as it indicates the company’s efficiency in meeting its short-term debt obligations.

The company has a dominant market capitalization and a steady dividend as well as a share repurchase policy. In 2022, 2021 and 2020, the company repurchased shares worth $1.5 billion, $1.4 billion and $402 million, respectively. It paid $1.1 billion, $970 million and $927 million in dividends in 2022, 2021 and 2020, respectively. It plans to return significant cash to shareholders through healthy dividends and share repurchases in the future as well.

A Risk

Waste Management has more current debt outstanding than cash. Cash and cash equivalents at the end of fourth-quarter 2022 were $351 million while the current debt level was $414 million.

Zacks Rank and Stocks to Consider

Waste Management currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Business Services sector are Avis Budget Group, Inc. CAR and ICF International, Inc. ICFI.

Avis Budget currently carries a Zacks Rank #2 (Buy). CAR has a VGM score of A. 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. You can see the complete list of today’s Zacks #1 Rank stocks here.

CAR delivered a trailing four-quarter earnings surprise of 78% on average.

ICF International sports a Zacks Rank #1 at present. ICFI’s 2023 revenues and earnings are expected to rise 10.4% and 6.4% year over year, respectively.

ICF International delivered a trailing four-quarter earnings surprise of 9.2% on average.

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Waste Management, Inc. (WM) : Free Stock Analysis Report

ICF International, Inc. (ICFI) : Free Stock Analysis Report

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