The waste management industry took a hit during the pandemic as the lockdowns led to declining waste products from the industrial sector. However, the industry has been gaining traction with reopening production facilities. The global waste management market is expected to grow at a CAGR of 3.4% to reach $2.48 trillion by 2030.
The global waste management market’s growth is expected to be primarily driven by proactive measures to reduce illegal dumping and curb greenhouse gas emissions. Also, increased awareness regarding renewable waste management systems and the surge in need to develop waste-to-energy solutions are expected to provide lucrative growth opportunities for this market.
Given this backdrop, prominent industry participants Waste Management, Inc. (WM) and Republic Services, Inc. (RSG) could be excellent additions to one’s portfolio. These stocks are rated Strong Buy in our proprietary rating system.
Waste Management, Inc. (WM)
WM provides waste management environmental facilities to residential, commercial, industrial, and municipal customers in North America. It offers waste collection and transportation services, material recovery facility (MRF), and owns and operates landfill gas-to-energy facilities and transfer stations.
WM’s operating revenues increased 13.4% year-over-year to $4.66 billion in the fiscal first quarter ended March 31, 2022. Its income from operations grew 18.2% from the year-ago value to $768 million. Net income attributable to WM increased 21.9% year-over-year to $513 million. Also, its EPS came in at $1.23, up 24.2% from the prior-year quarter.
Analysts expect WM’s revenue for the fiscal quarter ending June 2022 to come in at $4.84 billion, indicating an increase of 8.1% year-over-year. Also, the company’s EPS is expected to grow 10.3% year-over-year to $1.40 in the same quarter.
Over the past year, the stock has gained 3.3% to close the last trading session at $143.99.
WM’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WM is rated B in Growth, Stability, Sentiment, and Quality. Within the B-rated Waste Disposal industry, it is ranked #1 of 15 stocks. Click here to see additional POWR Ratings for Value and Momentum for WM.
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.
On May 5, RSG and Archaea Energy, Inc. (LFG), an industry-leading renewable natural gas (RNG) producer in the United States, announced a joint venture to develop 39 RNG projects across the country. This is expected to support RSG’s long-term sustainability goal of reusing 50% more biogas by 2030.
In the same month, RSG completed the acquisition of US Ecology, Inc. (ECOL). Through this acquisition, the company expects to expand RSG’s environmental solutions footprint across the United States and Canada and provide vertically integrated capabilities, boosting the company’s growth and revenue opportunities.
RSG’s revenue increased 14.4% from the prior-year quarter to $2.97 billion in the fiscal first quarter ended March 31, 2022. Total operating income for the quarter came in at $560.60 million, reflecting an increase of 13.9% year-over-year, while the net income attributable to RSG stood at $352 million, up 19% year-over-year. Its EPS increased 19.4% from its year-ago value to $1.11.
The consensus EPS estimate of $1.19 for the fiscal second quarter ending June 2022 represents an 8.8% improvement year-over-year. The consensus revenue estimate of $3.32 billion for the same quarter represents an 18% increase from the same period last year. It has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
RSG has gained 14.9% over the past year to close the last trading session at $124.53.
RSG’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our POWR Ratings system.
The company has a B grade in Growth, Quality, Sentiment, and Stability. The stock is ranked #2 in the same industry. To get RSG’s ratings for Momentum and Value, click here.
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WM shares fell $1.99 (-1.38%) in premarket trading Wednesday. Year-to-date, WM has declined -13.01%, versus a -20.79% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities. More...
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