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Can Waste Management (WM) Repeat a Beat in Q4 Earnings?

Waste Management, Inc. WM is scheduled to report fourth-quarter 2019 earnings on Feb 13, before market open. The company’s quarterly earnings surpassed the Zacks Consensus Estimate in the last five quarters.

In fact, shares of this waste management services provider have rallied 26.7% over a year, outperforming the Zacks Waste Removal Services industry’s rise of 19.8%.

Large Business Scale: A Boon to Q4 Earnings

Waste Management is the largest waste disposal company in North America for many reasons. First, the company has a huge market capitalization of $51 billion, which gave it a competitive edge over its peers. This, in turn, might get reflected in the to-be-reported results. Notably, the company’s close rival Republic Services, Inc. RSG has a market capitalization of $31.05 billion, which along with revenue figures compare unfavorably with the company’s metrics.

The significant market capitalization of Waste Management allows it to offer a diverse range of waste disposal and management services to a wide array of residential and commercial customers.

Also, in the waste management industry, size of the company plays a huge role because of the tasks involved in disposal and management of waste products. In the last reported quarter, the company’s top line benefited greatly from the strong yield and volume growth in its collection and disposal business. In fact, the same generated $198 million of incremental revenues for Waste Management, trend that most likely continued in the fourth quarter as well.

Waste Management has a solid foothold in the waste management industry on the back of its large number of trucks and employees that can cover every nook and cranny of a city to gather and get rid of waste, which is a herculean task.

This makes it difficult for any entrant in this industry to make a mark without the much-needed market-cap support. Waste Management is a well-established organization in that arena with a sturdy support from its individual, corporate and government clientele. Therefore, the company is expected to post better-than-expected earnings and revenues for the fourth quarter on the basis of its size and position in the waste management industry.

Q4 Earnings and Revenue Expectations

The Zacks Consensus Estimate for Waste Management’s fourth-quarter 2019 earnings is $1.17 per share, which suggests an improvement of 3.5% from the year-ago quarter’s earnings of $1.13.

In addition, the Zacks Consensus Estimate for revenues stands at $3.95 billion, indicating a 2.8% rise from $3.84 billion reported at December 2018 end.

The Zacks Consensus Estimate for the company’s current-year earnings has moved 0.2% north in the past 60 days.

Our proprietary model predicts an earnings beat for Waste Management in the fourth quarter. The right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. In this case, the stock fulfills the above-mentioned criteria. Waste Management has an Earnings ESP of +2.90% and a Zacks Rank #2. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Waste Management, Inc. Price and EPS Surprise

Waste Management, Inc. price-eps-surprise | Waste Management, Inc. Quote

You can see the complete list of today’s Zacks #1 Rank stocks here.

Others Stocks to Consider

Here are two other stocks from the broader Zacks Waste Removal Services industry that investors may consider as our model shows that these too have the perfect combination of elements to beat on fourth-quarter earnings:

Advanced Disposal Services, Inc. (ADSWis a provider of non-hazardous solid waste collection, transfer, recycling and disposal services. The company has an Earnings ESP of +35.85% and a Zacks Rank of #2. Advanced Disposal Services is set to report results on Feb 20.

Republic Services, Inc. is a provider of waste disposal services. The company has an Earnings ESP of +2.67% and is Zacks #2 Ranked. The company is slated to release results on Feb 13.

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