Why Is Waste Management (WM) Down 6.8% Since Last Earnings Report?

It has been about a month since the last earnings report for Waste Management (WM). Shares have lost about 6.8% in that time frame, underperforming the S&P 500.

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

Waste Management Q1 Earnings & Revenues Surpass Estimates

Waste Management reported solid first-quarter 2022 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.29 beat the Zacks Consensus Estimate by 15.2% and improved 21.7% year over year. Total revenues of $4.66 billion beat the consensus estimate by 4.6% and increased 13.4% year over year.

Quarterly Numbers in Detail

The Collection segment recorded revenues of $3.08 billion, up 11.1% from the prior-year quarter’s figure. The Landfill segment’s top line grew 14.9% year over year to $1.05 billion. Total revenues in the Transfer segment were up 4.5% to $486 million. Recycling segment revenues increased 32.5% to $453 million. Other businesses’ revenues totaled $575 million, up 20.5% year over year.

Adjusted operating EBITDA of $1.29 billion increased 10.7% from the year-ago quarter’s level. Adjusted operating EBITDA margin fell to 27.6% from 28.2% in the prior-year quarter.

Adjusted operating income came in at $803 million, up 16.5% from the year-ago quarter. Adjusted operating income margin rose to 17.2% from 16.8% in the year-ago quarter.

Waste Management exited first-quarter 2022 with cash and cash equivalents of $155 million compared with $118 million at the end of the prior quarter. Long-term debt was $13.1 billion compared with $12.7 billion at the end of the prior quarter.

The company generated $1.26 billion of cash from operating activities in the reported quarter while capital expenditures were $371 million. Free cash flow was $845 million.

During the reported quarter, the company returned $525 million to shareholders, which includes $275 million through cash dividends and $250 million through share repurchases.

 

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

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 C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

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

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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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