Waste Management (WM) Stock Declines While Market Improves: Some Information for Investors

Waste Management (WM) stock slightly underperformed the S&P 500, closing down 0.54% in the recent session, while analysts anticipate a 4.4% EPS increase to $1.90 and a 17.8% revenue increase to $6.36 billion in the upcoming earnings report. Full-year estimates project a 4.84% EPS increase to $7.58 and a 15.84% revenue increase to $25.56 billion, and the stock currently holds a Zacks Rank of #3 (Hold) with a Forward P/E ratio of 31.69, a premium to the industry average, and a PEG ratio of 3.18.

Analysis

Waste Management (WM) recently closed at $238.89, marking a 0.54% decline and underperforming the S&P 500's 0.01% gain on the same day. Over the past month, WM's stock has risen 2.61%, surpassing the Business Services sector's 1% loss but trailing the S&P 500's 5.2% advance. Market focus is on WM's upcoming earnings, with analysts forecasting an EPS of $1.90, representing a 4.4% year-over-year increase, and net sales of $6.36 billion, a significant 17.8% rise from the year-ago quarter. For the full fiscal year, consensus estimates project earnings of $7.58 per share (+4.84% YoY) on revenue of $25.56 billion (+15.84% YoY). Despite these growth projections, the Zacks Consensus EPS estimate has experienced a slight downward revision of 0.05% over the last month, and the stock currently holds a Zacks Rank of #3 (Hold). Valuation metrics show WM trading at a Forward P/E ratio of 31.69, which is a premium to the industry's average of 27.48. The company's PEG ratio is 3.18, comparable to the Waste Removal Services industry average of 3.27. However, this industry itself is ranked 160th by Zacks, placing it in the bottom 35% of over 250 industries, indicating potential headwinds or underperformance at the sector level.

Key Decisions for Investors

• Investors should scrutinize Waste Management's upcoming earnings report, specifically whether the company achieves the forecasted 4.4% EPS growth and 17.8% revenue increase, as these results will be critical in justifying its current valuation multiples.
• The stock's Forward P/E of 31.69 signals a premium relative to its industry, suggesting that robust growth is already priced in; therefore, any shortfall in earnings or guidance could disproportionately affect the share price.
• Given the Zacks Rank #3 (Hold), the recent minor negative revision in consensus EPS estimates, and the Waste Removal Services industry's low ranking, a cautious approach is advisable, with a focus on post-earnings analyst revisions and commentary on the sustainability of revenue and earnings growth.