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Why Is Waste Management (WM) Up 3.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Waste Management (WM). Shares have added about 3.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Waste Management due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Waste Management Q3 Earnings Surpass Estimates

Waste Managementreported solid third-quarter 2022 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share (excluding 2 cents from non-recurring items) of $1.56 beat the Zacks Consensus Estimate by 4% and improved 23.8% year over year. Total revenues of $5.08 billion beat the consensus estimate by 1% and increased 8.8% year over year.

Quarterly Numbers in Detail

The Collection segment recorded revenues of $3.39 billion, up 13% from the prior-year quarter’s figure. The Landfill segment’s top line grew 9.1% year over year to $1.2 billion. Total revenues in the Transfer segment were up 2.2% to $562 million. The recycling segment’s revenues dropped 9.5% to $420 million. Other businesses’ revenues totaled $614 million, up 11.4% year over year.

Adjusted operating EBITDA of $1.45 billion increased 10.7% from the year-ago quarter’s level. Adjusted operating EBITDA margin rose to 28.6% from 28.1% in the prior-year quarter.

Adjusted operating income came in at $950 million, up 19.9% from the year-ago quarter’s level. Adjusted operating income margin fell to 18.7% from 17% in the year-ago quarter.

Waste Management exited third-quarter 2022 with cash and cash equivalents of $137 million compared with $894 million at the end of the prior quarter. Long-term debt (less current portion) was $13.8 billion compared with $14 billion at the end of the prior quarter.

WM generated $1.18 billion of cash from operating activities in the reported quarter, while capital expenditures were $547 million. Free cash flow was $432 million.

During the reported quarter, Waste Management returned $808 million to its shareholders, including $541 million through cash dividends and $267 million through share repurchases.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Waste Management has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Waste Management has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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