Waste Management, Inc. (NYSE:WM) is presently reaping the rewards of increasing environmental concerns, complemented by its efforts to instill price discipline and manage costs effectively.
The company’s earnings are expected to exhibit steady growth in the coming years. Projections indicate a 6.6% increase in earnings for 2023 and a more robust 11.7% growth in 2024. Similarly, revenues are anticipated to follow an upward trajectory, with expected growth of 3.9% in 2023 and 5.4% in 2024.
WM’s Favorable Factors
Waste Management continues to ride the wave of mounting environmental concerns, driven by rapid industrialization, population growth, and government initiatives to combat illegal dumping. In the second quarter of 2023, the company recorded a 2% year-over-year increase in its top-line performance.
The company’s core operational strategies revolve around focused differentiation, continuous improvement, and maintaining strict control over prices and costs to enhance profitability. Leveraging its extensive asset base, Waste Management ensures long-term sustainable growth and a competitive edge. Simultaneously, cost management, process enhancements, and improvements in its digital platform further augment the quality of its services.
Waste Management remains committed to returning value to its shareholders. The company maintains a consistent dividend policy and actively repurchases its own shares. Over the past three years (2020, 2021, and 2022), Waste Management repurchased shares worth $402 million, $1.4 billion, and $1.5 billion, respectively. In terms of dividends, the company distributed $927 million, $970 million, and $1.1 billion in 2020, 2021, and 2022, respectively. Waste Management has plans to continue this practice, ensuring that shareholders benefit from healthy dividends and share buybacks in the future.
A Cautionary Note
It’s essential to note a potential risk in Waste Management’s financials. As of the end of the second quarter in 2023, the company’s current ratio stood at 0.82. This figure was lower than both the previous quarter’s 0.87 and the same period in the prior year, which had a current ratio of 1.07. A declining current ratio raises concerns, as it suggests that the company may encounter challenges in meeting its short-term financial obligations.
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