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, increase in stock price during the past year 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.

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Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.7%. Since the same quarter one year prior, revenues slightly increased by 0.8%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • 35.90% 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 6.52% trails the industry average.
  • WASTE MANAGEMENT INC's earnings per share declined by 17.2% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WASTE MANAGEMENT INC reported lower earnings of $1.76 versus $2.05 in the prior year. This year, the market expects an improvement in earnings ($2.18 versus $1.76).

Waste Management, Inc. provides waste management services to residential, commercial, industrial, and municipal customers in North America. It offers collection, transfer, recycling and resource recovery, and disposal services. Waste Management has a market cap of $17.24 billion and is part of the industrial goods sector and materials & construction industry. The company has a P/E ratio of 21.1, above the S&P 500 P/E ratio of 17.7. Shares are up 9.8% year to date as of the close of trading on Thursday.

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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