Yahoo Finance Zacks Industry Outlook Highlights Clean Harbors, Core & Main and Sims
For Immediate Release
Chicago, IL – March 2, 2023 – Today, Zacks Equity Research discusses Clean Harbors, Inc. CLH, Core & Main, Inc. CNM and Sims Ltd. SMSMY.
Industry: Waste Management
Link: https://www.zacks.com/commentary/2060401/3-stocks-to-watch-from-the-promising-waste-management-industry
The gradual resumption of business activities and reopening of the economy have led to increased waste production in the industrial and commercial sectors. These should enhance business opportunities for companies in the Zacks Waste Removal Services industry.
Notably, rising environmental concerns, rapid industrialization, an increase in population and an expected increase in non-hazardous waste will remain key drivers of the industry, given the significant rise in garbage and recycling. Also, technology adoption and the use of advanced collection and recycling solutions are expected to pick up pace.
Clean Harbors, Inc., Core & Main, Inc. and Sims Ltd. are some of the stocks that are likely to gain from the abovementioned favorable industry trends.
Industry Description
The Zacks Waste Removal Services industry comprises companies engaged in the collection, transportation, treatment, disposal, inspection and regulation of any form of waste. The companies serve residential, municipal, commercial and industrial customers in the United States and internationally.
Some industry participants provide non-hazardous solid waste collection, transfer, recycling, disposal, and energy services for small-container, large-container, municipal and residential, and energy services customers in the United States and Puerto Rico, while others provide waste management environmental services to residential, commercial, industrial, and municipal customers in North America. Some industry players operate as environmental infrastructure and solutions companies, providing water handling and recycling solutions.
What's Shaping the Future of the Waste Removal Services Industry?
A Healthy Demand Environment: The industry is mature, with growth coming from volume and price increases. Income has grown steadily over the past few years, enabling most industry players to pursue acquisitions and other investments.
The Uptick in Economic Activities Bodes Well: With the reopening of the economy and the resumption of business activities, waste generation is bound to increase, especially in industrial and commercial sectors. The proper disposal of medical waste will always remain an utmost priority to curb the spread of infection. Increase in population, industrialization and urbanization should remain the key drivers of the industry as it leads to a significant rise in garbage and recycling.
Also, the use of advanced collection and recycling solutions are expected to pick up pace. This should enhance business opportunities for waste management companies.
Government initiatives as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping are also expected to boost the industry.
High Operating Costs a Woe: Given that waste management is both a time-consuming and complex process, it requires higher capital and operating costs to manage waste collection vehicles, bins, and processing equipment along with a huge number of workers. Such high operational expenses are likely to keep the bottom line of the companies in this industrial cohort under pressure.
Zacks Industry Rank Indicates Encouraging Prospects
The Zacks Waste Removal Services industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #96. This rank places it in the top 38% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates strong near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that investors can buy or retain, given their growth prospects, let’s take a look at the industry’s recent stock market performance and current valuation.
Industry's Performance
The Zacks Waste Removal Services industry has outperformed the broader Zacks Business Services sector and the Zacks S&P 500 composite over the past year.
The industry has declined 4.3% over this period compared with a 15.3% decline of the broader sector and an 11.1% decline of the Zacks S&P 500 composite.
Industry's Current Valuation
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is commonly used for valuing waste removal services stocks because of their high debt levels, the industry is currently trading at 13.40X compared with the S&P 500’s 11.88X and the sector’s 24.23X.
Over the past five years, the industry has traded as high as 14.95X, as low as 8.57X and at the median of 11.94X.
3 Waste Management Stocks to Watch
Core & Main: This Zacks Rank #1 (Strong Buy) Missouri-based company distributes water, wastewater, storm drainage, and fire protection products to municipalities, professional contractors in the municipal, non-residential, and residential end markets. You can see the complete list of today’s Zacks #1 Rank stocks here.
Core & Main has been benefiting from solid demand across each of its end markets, backed by growth in municipal water infrastructure spending, growth in land and development due to continued housing demand, and recovery in the non-residential construction market. CNM has survived, courtesy of its reliable products and services. Active M&A strategy has been helping it expand into new geographies, access new product lines, consolidate existing market positions and add key talent. Higher net sales and cost-control initiatives will likely drive margins.
The Zacks Consensus Estimate for CNM’s 2023 EPS has moved up 10.8% in the past 90 days. CNMs stock has gained 0.3% in the past six months.
Sims Limited: This Zacks Rank #2 (Buy) Australia-based company engages in buying, processing, and selling ferrous and non-ferrous recycled metals in Australia, Bangladesh, China, Turkey, the United States, and internationally. Sims looks strong on the back of solid intake and sales volume growth, margin expansion, material improvement in market prices and cost reduction.
The Zacks Consensus Estimate for Sims’ 2023 EPS has improved 10.3% in the past 90 days. SMSMY stock has gained 9.9% in the past six months.
Clean Harbors: This Zacks Rank #3 (Hold) Massachusetts-based company provides environmental and industrial services in North America.
Clean Harbors focuses on improving its efficiency and lowering operating costs through enhanced technology, process efficiencies and stringent cost management. It continues to make capital investments to enhance its service quality and comply with government and local regulations. Buyouts help the company expand its business across multiple lines of services. Consistency in rewarding shareholders through share buybacks boosts investor confidence and positively impacts earnings per share.
The Zacks Consensus Estimate for Clean Harbors’ 2023 EPS has moved up 0.7% in the past 90 days. CLH stock has gained 13.1% over the past six months.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Sims Metal Management Ltd. (SMSMY) : Free Stock Analysis Report
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