Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.
NEW YORK (
) has been reiterated by TheStreet Ratings as a buy with a ratings score of B . The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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Highlights from the ratings report include:
- WASTE MANAGEMENT INC's earnings per share declined by 20.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, WASTE MANAGEMENT INC increased its bottom line by earning $2.05 versus $1.98 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus $2.05).
- Despite the weak revenue results, WM has outperformed against the industry average of 29.4%. Since the same quarter one year prior, revenues slightly dropped by 1.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 36.20% is the gross profit margin for WASTE MANAGEMENT INC which we consider to be strong. Regardless of WM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WM's net profit margin of 6.18% compares favorably to the industry average.
- In its most recent trading session, WM has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
Waste Management, Inc., through its subsidiaries, provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling, and disposal services. Waste Management has a market cap of $16.35 billion and is part of the industrial goods sector and materials & construction industry. The company has a P/E ratio of 19.1, above the S&P 500 P/E ratio of 17.7. Shares are up 4.5% year to date as of the close of trading on Tuesday.
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--Written by a member of TheStreet Ratings Staff.
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