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Here's Why Investors Should Retain WM Stock in Their Portfolios Now
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WM (WM - Free Report) stock has showcased a decent run in the year-to-date period. Shares of the company have gained 12.4%, outperforming the 8.2% rally of the industry and the Zacks S&P 500 composite’s 4% decline.
WM’s revenues are anticipated to increase 16.2% and 5.7% year over year in 2025 and 2026, respectively. Earnings are estimated to rise 6.2% in 2025 and 13.3% in 2026.
Factors That Auger Well for WM’s Success
Per MarketsandMarkets, the global waste management market size is anticipated to reach $1598.1 billion by 2029, seeing a CAGR of 5.6%. An expansive waste management industry and the growing adoption of advanced waste collection and recycling techniques are a runway for WM’s success. Increasing environmental concerns, rapid industrialization, population growth and an estimated rise in non-hazardous waste due to rapid economic growth are expected to boost business opportunities for waste management companies.
Government initiatives to introduce sustainable waste management mechanisms, lower greenhouse gas emissions and reduce illegal dumping are anticipated to drive demand. The Environmental Protection Agency's and Resource Conservation and Recovery Act, targeted at reducing open dumping and managing hazardous and non-hazardous waste, will significantly benefit the industry.
WM continues to execute core operating initiatives targeting focused differentiation and continuous improvement, and instilling price and cost discipline to achieve better margins. While differentiation through capitalization of extensive assets ensures long-term profitable growth and competitive advantages, cost control and process improvement help enhance service quality. We expect operating revenues to rise 16.2% in 2025.
WM continues to execute core operating initiatives aiming at focused differentiation to boost its revenues. Differentiation via capitalization of extensive assets ensures long-term profitable growth, evidenced by 20.6% net income growth in 2024. The company continues to instill price and cost discipline to achieve better margins. A 90-basis-point increase in the operating margin in 2024 from the preceding year is a testament to WM’s successful implementation of price management, which improved service quality as well.
In 2024, 2023, 2022 and 2021, the company repurchased shares worth $262 million, $1.3 billion, $1.5 billion and $1.35 billion, respectively. It paid out $1.21 billion, $1.14 billion, $1.1 billion and $970 million in dividends in 2024, 2023, 2022 and 2021, respectively. WM’s plan to return significant cash to shareholders through healthy dividends and share repurchases boosts investor morale.
Risks Faced by WM
WM’s current ratio (a measure of liquidity) at the end of fourth-quarter 2024 was pegged at 0.76, lower than the industry average of 0.94. A current ratio of less than 1 indicates that the company may not be able to pay off its short-term obligations easily.
Image Source: Zacks Investment Research
The company is witnessing a surge in its financing costs. The rise in interest expenses for 2024 can be attributed primarily to an increase in average debt balances to fund WM's acquisition of Stericycle. Interest expenses, net for the years 2021, 2022, 2023 and 2024, stood at $365 million, $378 million, $500 million and $598 million, respectively. Rising finance costs impact the company's bottom line negatively.
Image: Bigstock
Here's Why Investors Should Retain WM Stock in Their Portfolios Now
WM (WM - Free Report) stock has showcased a decent run in the year-to-date period. Shares of the company have gained 12.4%, outperforming the 8.2% rally of the industry and the Zacks S&P 500 composite’s 4% decline.
WM’s revenues are anticipated to increase 16.2% and 5.7% year over year in 2025 and 2026, respectively. Earnings are estimated to rise 6.2% in 2025 and 13.3% in 2026.
Factors That Auger Well for WM’s Success
Per MarketsandMarkets, the global waste management market size is anticipated to reach $1598.1 billion by 2029, seeing a CAGR of 5.6%. An expansive waste management industry and the growing adoption of advanced waste collection and recycling techniques are a runway for WM’s success. Increasing environmental concerns, rapid industrialization, population growth and an estimated rise in non-hazardous waste due to rapid economic growth are expected to boost business opportunities for waste management companies.
Government initiatives to introduce sustainable waste management mechanisms, lower greenhouse gas emissions and reduce illegal dumping are anticipated to drive demand. The Environmental Protection Agency's and Resource Conservation and Recovery Act, targeted at reducing open dumping and managing hazardous and non-hazardous waste, will significantly benefit the industry.
WM continues to execute core operating initiatives targeting focused differentiation and continuous improvement, and instilling price and cost discipline to achieve better margins. While differentiation through capitalization of extensive assets ensures long-term profitable growth and competitive advantages, cost control and process improvement help enhance service quality. We expect operating revenues to rise 16.2% in 2025.
WM continues to execute core operating initiatives aiming at focused differentiation to boost its revenues. Differentiation via capitalization of extensive assets ensures long-term profitable growth, evidenced by 20.6% net income growth in 2024. The company continues to instill price and cost discipline to achieve better margins. A 90-basis-point increase in the operating margin in 2024 from the preceding year is a testament to WM’s successful implementation of price management, which improved service quality as well.
In 2024, 2023, 2022 and 2021, the company repurchased shares worth $262 million, $1.3 billion, $1.5 billion and $1.35 billion, respectively. It paid out $1.21 billion, $1.14 billion, $1.1 billion and $970 million in dividends in 2024, 2023, 2022 and 2021, respectively. WM’s plan to return significant cash to shareholders through healthy dividends and share repurchases boosts investor morale.
Risks Faced by WM
WM’s current ratio (a measure of liquidity) at the end of fourth-quarter 2024 was pegged at 0.76, lower than the industry average of 0.94. A current ratio of less than 1 indicates that the company may not be able to pay off its short-term obligations easily.
The company is witnessing a surge in its financing costs. The rise in interest expenses for 2024 can be attributed primarily to an increase in average debt balances to fund WM's acquisition of Stericycle. Interest expenses, net for the years 2021, 2022, 2023 and 2024, stood at $365 million, $378 million, $500 million and $598 million, respectively. Rising finance costs impact the company's bottom line negatively.
WM’s Zacks Rank & Stocks to Consider
WM has a Zacks Rank #3 (Hold) at present.
Some better-ranked stocks from the broader Zacks Business Services sector are UiPath (PATH - Free Report) and Limbach Holdings, Inc. (LMB - Free Report) , each flaunting a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
UiPath has a long-term earnings growth expectation of 19%. PATH delivered a trailing four-quarter earnings surprise of 36.4%, on average.
Limbach Holdings has a long-term earnings growth expectation of 12%. LMB delivered a trailing four-quarter earnings surprise of 42.3%, on average.