Heightened government regulations and the strengthening of environmental concerns are expected to drive growth in the waste disposal industry. As the industry shows solid potential, quality waste disposal stocks Waste Management, Inc. (WM), Stericycle, Inc. (SRCL), and Concrete Pumping Holdings, Inc. (BBCP) might be solid buys for sustainable profits.
Waste generation has increased massively around the world in recent decades, and there are no signs of it slowing down. By 2050, global municipal solid waste generation is projected to rise by roughly 70% to 3.40 billion metric tons, due to a number of factors, such as population growth, urbanization, and economic growth, as well as consumer shopping habits.
Moreover, the global waste management market is expected to be driven by stringent government regulations such as the Resource Conservation and Recovery Act and Waste Shipment Regulation for improving this service. The global waste management market is expected to grow at a CAGR of 5.4% until 2030.
Additionally, large-scale urban migration has further had a significant impact on solid waste generation, thereby increasing the demand for an effective solid waste management framework with a strong focus on economic growth and public safety. Solid waste management market is anticipated to grow at a CAGR of 2.3% until 2032.
Let’s discuss the stocks mentioned above in detail:
Waste Management, Inc. (WM)
WM engages in the provision of environmental solutions to residential, commercial, industrial, and municipal customers in the United States and Canada.
WM’s trailing-12-month EBITDA margin of 27.74% is 105.6% higher than the 13.50% industry average. Its trailing-12-month net income margin of 11.33% is 78.5% higher than the 6.35% industry average.
WM pays a $2.80 per share dividend annually, which translates to a 1.65% yield on the current price. The company has a four-year average dividend yield of 1.74%.
WM’s adjusted revenues increased 5% year-over-year to $4.89 billion in the fiscal first quarter, which ended March 31, 2023. Its adjusted net income came in at $535 million. Also, its EPS increased 1.6% year-over-year to $1.31 and adjusted operating EBITDA increased 3.7% year-over-year to $1.33 billion.
WM’s revenue is expected to rise 4.1% year-over-year to $5.23 billion for the fiscal second quarter ended June 2023. The company’s EPS for the same quarter is expected to increase 7.3% year-over-year to $1.54. Additionally, the stock has topped consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.
The stock has gained 9.5% over the past nine months to close the last trading session at $170.01.
WM’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
WM also has a B grade for Quality and Stability. It is ranked #5 out of 15 stocks in the B-rated Waste Disposal industry.
To access additional ratings for WM’s Value, Growth, Sentiment, and Momentum, click here.
Stericycle, Inc. (SRCL)
SRCL provides regulated and compliance solutions in the United States, Europe, and internationally.
SRCL’s trailing-12-month gross profit margin of 37.71% is 26.4% higher than the 29.83% industry average. Its trailing-12-month EBITDA margin of 16.71% is 23.8% higher than the 13.50% industry average.
During the fiscal first quarter that ended March 31, 2023, SRCL’s revenue increased 3% year-over-year to $684.30 million. Gross profit increased 6.7% year-over-year to $261 million, while its income per common share attributable to SRCL came in at $0.12, compared to negative $0.15 in the previous-year quarter.
SRCL’s revenue is expected to increase marginally year-over-year to $685.29 million for the fiscal second quarter ended June 2023. Its EPS is expected to increase 5.7% year-over-year to $0.51 for the same quarter. Also, it has surpassed revenue estimates in three of the trailing four quarters.
Shares of SRCL have gained 9.3% over the past three months to close the last trading session at $45.59.
SRCL’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has an A grade for Growth and a B in Stability and Sentiment. It is ranked #6 in the same industry.
Beyond what is stated above, we’ve also rated for Value, Quality, and Momentum. Get all SRCL ratings here.
Concrete Pumping Holdings, Inc. (BBCP)
BBCP provides concrete pumping and waste management services in the United States and the United Kingdom.
BBCP’s trailing-12-month EBIT margin of 13.14% is 35% higher than the 9.73% industry average. Its trailing-12-month gross profit margin of 40.52% is 35.8% higher than the 29.83% industry average.
BBCP’s revenue increased 11.7% year-over-year to $107.79 million during the second quarter that ended April 30, 2023. Gross profit increased 11.6% year-over-year to $43.47 million, while its net income per common share came in at $0.09. Also, its net income came in at $5.59 million.
Street expects BBCP’s revenue for the fiscal third quarter ending July 2023 to increase 10.1% year-over-year to $114.98 million. Its EPS is expected to increase 20.9% year-over-year to $0.16 for the same quarter. Also, it has surpassed revenue and EPS estimates in three of the trailing four quarters.
The stock has gained 35.2% year-to-date to close the last trading session at $7.91.
It is no surprise that BBCP has an overall rating of B, which equates to a Buy in our POWR Ratings system.
BBCP is graded a B in Momentum, Stability, Sentiment, and Quality. It is ranked #3 in the same industry.
In addition to the grades stated above, BBCP’s grades for Growth and Value can be seen here.
What To Do Next?
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WM shares were unchanged in premarket trading Monday. Year-to-date, WM has gained 9.35%, versus a 15.54% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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