Chicago, IL – January 24, 2024 – Today, Zacks Equity Research discusses Waste Management, Inc. WM, Republic Services, Inc. RSG and Stericycle, Inc. SRCL.
Industry: Waste Removal
Link: https://www.zacks.com/commentary/2213307/time-to-buy-these-3-stocks-from-a-prospering-waste-removal-sector
The Waste Management industry is experiencing positive trends due to a rise in government regulations, the integration of advanced technologies and a growing awareness of environmental concerns. The sector is capitalizing on increased industrialization and urbanization, coupled with a greater emphasis on improved waste management practices.
Per Statista, the global waste management sector reached a value of $1.6 trillion in 2020 and is expected to undergo substantial growth, reaching $2.5 trillion by 2030. The driving forces behind this expansion include improved waste collection methods and the escalating volumes of waste in emerging markets.
Waste Management, Inc., Republic Services, Inc. and Stericycle, Inc. are some stocks likely to gain from the above-mentioned factors.
Companies in the Zacks Waste Removal Services industry play a vital role in the collection, treatment, and responsible management of diverse waste types, aiming to minimize their impact on both the environment and public health. This market is categorized into distinct segments based on the type of waste, including Industrial, Commercial, Domestic and Agricultural waste.
The Industrial waste segment has gained significance due to the ongoing industrial expansion, creating a substantial demand for efficient waste management solutions. The market encompasses Collection and Disposal services. The Disposal services segment, primarily fueled by the growing need for waste recycling to mitigate environmental impacts, stands as the primary revenue-generating category.
Reviving Demand: The industry is mature, with demand for services remaining stable over time. Revenues, income and cash flows are anticipated to gradually reach the pre-pandemic healthy levels, aiding most industry players in paying out stable dividends.
Rising Importance of Environmental, Social and Governance (ESG) Goals: Waste management is a cornerstone of ESG principles, as it allows companies to enhance their ESG ratings by promoting environmental sustainability, fostering social well-being and upholding good governance. Embracing responsible waste management not only meets legal requirements but also aligns with consumer and investor desires for sustainable and ethical business practices. In the modern landscape, waste management is not merely a duty but a chance for businesses to showcase their dedication to ESG values, which underpin lasting success and resilience.
Technology Bolsters the Growth of the Waste Management Industry: Technology has become a crucial ally in waste management, addressing the challenges of waste generation and environmental impact. This transformative correlation promises a more sustainable future. Advancing technology empowers more efficient, eco-friendly waste management, reducing the ecological footprint and promoting sustainability. In a world grappling with waste challenges, technology leads us toward responsible waste management and a cleaner planet.
Innovations in Waste-to-Energy Technology: Waste-to-energy (WTE) tech transforms waste into energy via methods like incineration or gasification. Per a report by Fortune Business Insights, The global WTE market is set to reach $44.62 billion by 2029, driven by the shift to renewable resources for reduced carbon content.
The industry, vital in the era of clean energy, offers a renewable energy source and addresses the mounting waste challenge. WTE comprises thermal solutions (pyrolysis, incineration, gasification) and biological solutions (composting, anaerobic digestion), playing a crucial role in sustainable waste management.
The Zacks Waste Removal Services industry, which is housed within the Zacks Business Services sector, currently carries a Zacks Industry Rank #103. This rank places it in the top 42% of 248 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that investors can buy or retain, given their sturdy potential, let’s take a look at the industry’s recent stock market performance and current valuation.
The Zacks Waste Removal Services Industry has outperformed the broader Zacks Business Services sector but lagged behind the Zacks S&P 500 composite over the past year.
The industry has gained 19.4% over this period, beating the 13.8% increase in the broader sector but lower than the 21.3% upside of the Zacks S&P 500 composite.
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, the industry is currently trading at 12.07X compared with the S&P 500’s 14.1X and the sector’s 27.49X.
Over the past year, the industry has traded as high as 13.06X and as low as 8.23X, with the median being 11.31X.
Let's discuss three stocks that are expected to benefit from the favorable industry conditions. All three recommended companies carry Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Republic Services, headquartered in Arizona, provides environmental services across the United States. The company's revenue growth benefits from favorable acquisitions and internal expansion. Republic Services is actively enhancing operational efficiency through initiatives like transitioning to compressed natural gas collection vehicles and upgrading rear-loading trucks to automated-side loaders, resulting in cost reduction and improved profitability. Furthermore, its steady dividend distribution and share repurchases enhance both investor trust and earnings per share.
RSG’s 2023 revenues are expected to grow 10% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 11% growth from the year-ago reported figure, which has been kept constant for the past 60 days. It beat the Zacks Consensus Estimate in all the four previous quarters, averaging at 8.9%. RSG has a long-term expected EPS growth rate of 9.97%.
The company has gained 36.8% in the past year.
Waste Management is a leading waste management company in the United States. It provides comprehensive environmental services, including waste collection, recycling, disposal and sustainable solutions, contributing to a cleaner, more sustainable future. Waste Management‘s commitment to implementing its fundamental operational strategies while enforcing effective pricing and cost control bolsters its growth. Consistent dividend payments and share buybacks boost investors' confidence and positively impact earnings per share.
WM’s 2023 revenues are expected to grow 3.5% from the year-ago reported figure. The company’s 2023 EPS estimates indicate 7% growth from the year-ago reported figure, which has been revised slightly upwards in the past 60 days. WM has a long-term expected EPS growth rate of 10.02%.
The company has gained 20.8% in the past year.
Stericycle is a company specializing in providing services related to medical waste management and compliance solutions. They are known for offering services that help healthcare facilities, businesses, and other organizations properly handle and dispose of medical and biohazardous waste. This includes services such as collection, transportation, treatment and disposal of various types of medical waste to ensure compliance with regulatory standards.
RSG’s 2023 revenues are expected to decline 1.2% from the year-ago reported figure. The company’s 2023 EPS estimates indicate a 10.3% decline from the year-ago reported figure, which has been revised northward by 1.1% in the past 60 days. It has an average earnings surprise of 0.43% in the past four quarters. SRCL has a long-term expected EPS growth rate of 8%.
The company has declined 9% in the past year.
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Stericycle, Inc. (SRCL) : Free Stock Analysis Report
Waste Management, Inc. (WM) : Free Stock Analysis Report
Republic Services, Inc. (RSG) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
