Why Waste Management (WM) Stock Is Rising Today

NEW YORK (TheStreet) -- Waste Management (WM) shares are up 3% to $45.22 on Monday after the company announced that it's selling Wheelabrator Technologies to Energy Capital Partners for $1.94 billion.

In separate news, the company also reported a 14% drop in second quarter profit from the year ago period to $210 million, or 60 cents per diluted share, but 1 cent better than analysts were expecting for the quarter.

Revenue of $3.56 billion fell below analyst $3.61 billion expectations for the quarter.

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TheStreet Ratings team rates WASTE MANAGEMENT INC as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate WASTE MANAGEMENT INC (WM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, good cash flow from operations and growth in earnings per share. 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 analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Commercial Services & Supplies industry average. The net income increased by 35.7% when compared to the same quarter one year prior, rising from $168.00 million to $228.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.0%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • WASTE MANAGEMENT INC has improved earnings per share by 36.1% 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 reported lower earnings of $0.21 versus $1.76 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $0.21).
  • Net operating cash flow has slightly increased to $584.00 million or 1.21% when compared to the same quarter last year. Despite an increase in cash flow, WASTE MANAGEMENT INC's average is still marginally south of the industry average growth rate of 1.76%.
  • The gross profit margin for WASTE MANAGEMENT INC is currently lower than what is desirable, coming in at 34.92%. Regardless of WM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 6.71% trails the industry average.
  • You can view the full analysis from the report here: WM Ratings Report
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