During the pandemic, the waste management business suffered due to the lockdowns, which resulted in decreased waste products from the industrial sector. But the industry has gained traction with the restoration of production facilities. So, it could be wise to add quality waste management stocks Republic Services, Inc. (RSG) and Clean Harbors, Inc. (CLH) to one’s portfolio now.
Growing industrialization and urbanization and improved waste management awareness have raised the demand for waste management systems. Technical developments in recycling facilities have also contributed to the industry’s growth.
The global market is dominated by construction and demolition waste, accounting for 29.7% of the market share in recent years. Other major waste-producing sources include manufacturing, chemical, mining, oil and gas, agriculture, and nuclear.
The global industrial waste management market is expected to grow at a CAGR of 5.6% until 2029.
The global Waste Management market is expected to expand at a CAGR of 2.5% until 2028.
So, let’s delve deeper into the stocks mentioned above:
Republic Services, Inc. (RSG)
RSG offers environmental services, including collection and processing of recyclable materials, collection, transfer, and disposal of non-hazardous solid waste, and other environmental solutions in the United States.
RSG’s trailing-12-month EBITDA margin of 28.7% is 13.35% higher than the 114.9% industry average, while its trailing-12-month gross profit margin of 40.40% is 37.9% higher than the industry average of 29.29%.
RSG’s revenue increased 19.5% from the prior-year quarter to $3.59 billion in the fiscal first quarter ended December 31, 2022. Total operating income for the quarter came in at $577.20 million, reflecting an increase of 15.1% year-over-year, while the net income attributable to RSG stood at $346.80 million, up 10.8% year-over-year.
Its EPS increased 11.2% from its year-ago value to $1.09.
The consensus revenue estimate of $14.74 billion for the same year reflects a 9.1% increase from the prior year. Its EPS to grow 5.1% year-over-year to $5.18 in 2023. It surpassed the EPS estimates in all four trailing quarters. RSG has gained marginally over the past nine months to close the last trading session at $130.49.
RSG’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is also rated a B in Stability, Sentiment, and Quality. In the A-rated Waste Disposal industry, it is ranked #3 out of 15 stocks. Click here to see RSG’s rating for Growth, Value, and Momentum.
Clean Harbors, Inc. (CLH)
CLH in Norwell, Mass., provides environmental and industrial services in North America. The company operates through two segments: Environmental Services and Safety-Kleen Sustainability Solutions.
CLH’s trailing-12-month EBITDA margin of 19.01% is 13.35% higher than the 42.4% industry average, while its trailing-12-month gross profit margin of 31.41% is 7.2% higher than the industry average of 29.29%.
For the fourth quarter, ended December 31, 2022, CLH’s revenues came in at $1.28 billion, up 14.2% year-over-year. Its adjusted net income was $78.54 million, up 61.7% year-over-year, while its adjusted EPS came in at $1.44, up 61.8% year-over-year.
Street expects CLH’s revenue to increase by 3.6% to $5.35 billion in 2023. Its EPS is estimated to increase by 30% per annum for the next five years. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 52.1% over the past year to close the last trading session at $132.28.
CLH’s POWR Ratings are consistent with this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. It also has and a B grade for Sentiment, Growth, Value, and Quality. Within the same industry, it is ranked first.
In addition to the POWR Rating grades we have stated above, you can see CLH’s Growth, Sentiment, and Momentum ratings here.
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RSG shares were unchanged in premarket trading Tuesday. Year-to-date, RSG has gained 1.16%, versus a 4.07% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions. More...
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