Waste Management Inc Stock Buy Recommendation Reiterated (WM)

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 ( TheStreet) -- Waste Management (NYSE: WM) 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 revenue growth, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • WM's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 3.3%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $669.00 million or 39.95% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 19.98%.
  • WASTE MANAGEMENT INC's earnings per share declined by 10.0% 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 ($2.12 versus $2.05).
  • 35.30% 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, the net profit margin of 6.00% trails the industry average.

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. The company has a P/E ratio of 16.5, above the average materials & construction industry P/E ratio of 16.3 and below the S&P 500 P/E ratio of 17.7. Waste Management has a market cap of $14.98 billion and is part of the industrial goods sector and materials & construction industry. Shares are down 0.7% year to date as of the close of trading on Tuesday.

You can view the full Waste Management Ratings Report or get investment ideas from our investment research center.

--Written by a member of TheStreet Ratings Staff.

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