Waste Management, Inc. (NYSE: $WM) is the leading provider of extensive environmental solutions and North America’s largest disposal network and collection fleet. Through its associates, it provides waste management services to millions of customers throughout North America.
It is the largest recycler in North America, and a leader in landfill gas harvesting, with a fleet of over 12,000 natural gas trucks, the largest of its kind in North America.
Over the past six months, WM shares have grown nearly 30%, outperforming the competition. Here is a closer look at its stellar performance.
Waste Management’s Financial Highlights
The Houston-based company reported impressive financial results for Q4 and FY2023 on 12 Feb 2024 that ended Dec 31st, 2023, showcasing its ability to navigate challenging market conditions and deliver consistent growth.
For Q42023, Waste Management reported a total revenue of $5,217 billion, a 5.7% increase compared to the same period in 2022. This growth was primarily driven by a strong 7.3% core price increase. The company’s adjusted income from operations grew to $1,032 billion, up from $814 million in the prior-year quarter, while adjusted operating EBITDA reached $1,558 billion, reflecting a 14.7% year-over-year increase.
For fiscal 2023, Waste Management reported a total revenue of $20,426 billion, a 3.7% increase compared to 2022. This was primarily driven by a 7.0% core price increase, partially offset by lower commodity prices, which negatively impacted revenue from energy surcharges, recycling sales and the company’s renewable energy business.
The company’s adjusted income from operations for the full year increased to $3,828 billion, compared to $3,474 billion in the previous year. Adjusted operating EBITDA grew 7.0% to $5,899 billion, resulting in a 90 basis point expansion in adjusted operating EBITDA margin to 28.9%.
Waste Management will announce its Q1 2024 financial results after market close on April 24, 2024, and hold the investor conference call at 10 AM ET on April 25, 2024.
2024 Outlook and Growth Initiatives
Waste Management is optimistic about its financial performance for 2024, projecting robust growth across key metrics. The company anticipates total revenue to increase between 6% and 7%, driven by disciplined pricing strategies expected to result in core price growth of 6% to 6.5% and collection and disposal yield approaching 5%. Furthermore, the company expects collection and disposal volume to grow by around 1%.
Waste Management’s adjusted operating EBITDA is forecasted to range between $6.275 billion and $6.425 billion, representing a $450 million increase at the midpoint. This includes an estimated $115 million in adjusted operating EBITDA growth from the company’s sustainability-focused investments. The adjusted operating EBITDA margin is projected to expand by 30 basis points to 29.0%-29.4%.
Additionally, Waste Management recently elected Tom Bené, President and CEO of Breakthru Beverage Group, as an independent member of its Board of Directors. Bené’s extensive business leadership experience and track record of driving growth and innovation will be valuable as WM navigates new opportunities. His election expands the Board to 10 members, with 9 independent directors.
The same day, March 1st, 2024, it declared a $0.75 quarterly dividend, payable on March 28, 2024, to stockholders of record on March 15, 2024.
Sustainability Growth Outlook
Waste Management continues to invest in its industry-leading network of renewable natural gas projects and recycling assets, which are expected to contribute significant value to the company’s long-term growth.
The company has updated its sustainability growth program outlook, planning to invest $2.8 billion to $2.9 billion in growth investments across the recycling and renewable energy platforms from 2022 to 2026. This includes the $1.325 billion already invested in 2022 and 2023.
The renewable natural gas projects are expected to have a payback period of about three years, while the recycling assets are projected to have a payback period of about six years. These investments are anticipated to contribute incremental run-rate adjusted operating EBITDA of about $800 million by the end of 2026, with $510 million coming from renewable natural gas projects and $290 million from recycling projects.
Dividend and Share Repurchase Update
Demonstrating its confidence in the business and commitment to shareholder returns, Waste Management plans to increase the annual dividend by $0.20 to $3.00, marking the 21st consecutive year of dividend increases.
Additionally, the Board has renewed the share buyback program, providing for the repurchase of up to $1.5 billion of Waste Management’s common stock. The company expects to repurchase $1 billion of its common stock in 2024.
Waste Management Stock Performance
Waste Management’s stock has seen impressive gains over the past six months, rising 28.68% and outperforming the 24.97% growth of the Dow Jones U.S. Waste & Disposal Services Index and 15.58% growth of the SPX in the same period.
At the close of trading on Monday, April 15, 2024, WM stock recorded a flat reading of 0.00% gain, having consolidated all day. As of Tuesday, April 16 12:01 PM EDT, the stock was up 0.08% at $205.52. The current price is just shy of the 52-week high of $214.54 and above the 50 DMA of $205.23 and 200 DMA of $176.88.
The company’s steady revenue stream from essential waste management services and its focus on differentiation, cost control and shareholder returns have all contributed to its strong performance.
Analysts’ Outlook on Waste Management (WM)
19 Wall Street analysts give WM stock an overall moderate buy rating. They forecast a broad range for the stock, with a high of $256 and a low of $175. Their average forecast of $211.11 is a 2.56% upside based on the most recent price.
Should You Consider Buying WM Stock in 2024?
Waste Management’s consistent financial performance, focus on operational efficiency, and shareholder-friendly policies make it an attractive investment option for 2024. As a leading provider of essential waste management services, the company is well-positioned to benefit from ongoing industry trends like increased environmental awareness and population growth.
Its commitment to returning capital to shareholders through dividends and buybacks further enhances its appeal. The company is currently in a multi-year capital expenditure cycle, which will see it grow cash flow in the long run, among other things. Its solid execution of core initiatives and long-term growth prospects could make it a worthy addition to your portfolio.
Disclaimer: This website provides information about cryptocurrency and stock market investments. This website does not provide investment advice and should not be used as a replacement for investment advice from a qualified professional. This website is for educational and informational purposes only. The owner of this website is not a registered investment advisor and does not offer investment advice. You, the reader / viewer, bear responsibility for your own investment decisions and should seek the advice of a qualified securities professional before making any investment.
