Tags: Waste | Management | growth | WM

Waste Management Faces Slow Growth, Rising Costs

By    |   Wednesday, 21 Dec 2011 10:43 AM

Waste Management (WM) is the largest waste management company in the United States. In the current economy the company has struggled with slow growth while facing increasing costs. Waste Management investors must determine if the attractive dividend is enough to offset the prospects of continued slow growth.

Waste Management provides waste collection and recycling services throughout the United States. Revenue sources include commercial and residential collection, landfill fees, transfer, recycling, and energy created from waste.

Collection accounts for about 57 percent of revenues, and landfill is the next largest source at 18 percent of revenue. The waste management business is defined by annuity-like streams of revenue offset by costs such as expensive equipment, high levels of fuel usage and labor.

For the first nine months of 2011, Waste Management reported operating revenue of $9.97 billion, up from $9.33 billion a year earlier. Net income for the period was $695 million or $1.46 per share up from $672 million and $1.39 per share.

For the full year, the earnings estimate is $2.05 compared to earnings of $1.98 in 2010 and $2.01 in 2009.

Recent acquisition

In July 2011, Waste Management completed the acquisition of Oakleaf Global Holdings. Oakleaf has a national network of waste haulers and recyclers, which will be integrated into the Waste Management system, providing up to $600 million in additional revenue.

Of the 9 percent year-over-year revenue gain reported in the company's third quarter, about 40 percent of the gain was from Oakleaf-sourced revenues. The acquisition is likely the reason for the 2012 consensus earnings estimate of $2.35 per share, well above the earnings of the last few years.

Waste Management pays one of the highest yields of the S&P 500 companies and in December the board of directors increased the dividend by 6 cents annually to 35.5 cents quarterly. The dividend has increased for eight consecutive years.

Recently, Wedbush Securities analysts reiterated their underperform rating on WM and lowered their target price to $3 below the recent share price.

The company next reports on Jan. 26.

© 2017 Newsmax Finance. All rights reserved.

   
1Like our page
2Share
Companies
Waste Management (WM) is the largest waste management company in the United States. In the current economy the company has struggled with slow growth while facing increasing costs. Waste Management investors must determine if the attractive dividend is enough to offset the...
Waste,Management,growth,WM
339
2011-43-21
Wednesday, 21 Dec 2011 10:43 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved