Waste Management (NYSE:WM) Q3 2020 Earnings Prep

in EARNINGS/INVESTING IDEAS by

Waste Management, Inc. (NYSE:WM) is scheduled to report Q3 earnings results before markets open for trading on November 2, 2020.

The company is expected to report earnings of $1.01/share on revenue of $3.737 billion. The consensus earnings per share (EPS) of $1.01/share is based on a poll of 14 analysts and represents a decline in eps of −14.9% over the same quarter last year, when the company reported earnings of $1.19/share.

The revenue forecast of $3.737 billion based on a poll of 12 analysts implies a year-over-year (YoY) decline in revenue of −5.8%. Last year the company reported $3.967 billion in revenue for the quarter.

Expected to report EPS contraction of −14.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $3,737.47 $3,967.00 −5.8%
EPS $1.01 $1.19 −14.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 7 out of the last 8 tracked quarters, and met expectations 1 quarter.

What are your expectations from Waste Management, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.81 $0.88 9.3% Beat
Q1, 2020 $0.93 $0.93 0% Met
Q4, 2019 $1.15 $1.19 3.2% Beat
Q3, 2019 $1.15 $1.19 3.9% Beat
Q2, 2019 $1.09 $1.11 1.8% Beat
Q1, 2019 $0.93 $0.94 1.4% Beat
Q4, 2018 $1.06 $1.13 6.2% Beat
Q3, 2018 $1.11 $1.15 3.8% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $109.65 $109.60 0.0% Decline
May 6, 2020 $99.02 $101.45 2.5% Increase
February 13, 2020 $125.61 $125.75 0.1% Increase
October 23, 2019 $116.92 $113.17 −3.2% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.95, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.95 implies a 0.2% chance of earnings manipulation.

Fundamentals And Technical Analysis

Waste Management, Inc. is currently trading at $113.40/share, down −2.8% for the day. The company is trading at approximately 89.4% of its 52-week high of $126.79/share. The company’s stock price is up 3.5% since the last earnings report and down −0.8% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 46.77 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:WM Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 29.76 and a forward P/E multiple of 30.22.

Waste Management, Inc.’s current share price also implies a price-to-book (P/B) multiple of 6.95. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $113.40
P/E Ratio 29.8x
P/E Ratio (Fwd) 30.2x
PEG Ratio −4.0
Total Debt / Total Capital 20.6%
Levered Free Cash Flow $1.931 billion
EV / EBITDA 13.7x

Finbox

Waste Management, Inc. is a large-cap stock with a market capitalization of $47.907 billion and a total enterprise value of $58.034 billion. The company operates in the Industrials sector and the Commercial Services & Supplies industry.

Waste Management, Inc., through its subsidiaries, provides waste management environmental services to residential, commercial, industrial, and municipal customers in North America. It offers collection services, including picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF), or disposal site; and owns, develops, and operates landfill gas-to-energy facilities in the United States, as well as owns and operates transfer stations. As of December 31, 2019, the company owned or operated 244 solid waste landfills; 5 secure hazardous waste landfills; 103 MRFs; and 302 transfer stations. It also provides materials processing and commodities recycling services; recycling brokerage services, such as managing the marketing of recyclable materials for third parties; and other strategic business solutions. In addition, the company offers construction and remediation services; services related with the disposal of fly ash, and residue generated from the combustion of coal and other fuel stocks; in-plant services comprising full-service waste management solutions and consulting services; and specialized disposal services for oil and gas exploration and production operations. Further, it offers fluorescent bulb and universal waste mail-back services through LampTracker program; portable restroom services under the Port-o-Let name; and street and parking lot sweeping services, as well as holds interests in oil and gas producing properties. The company was formerly known as USA Waste Services, Inc. and changed its name to Waste Management, Inc. in 1998. Waste Management, Inc. was incorporated in 1987 and is based in Houston, Texas.

Expertise: financial technology, analyzing market trends. Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors. Brian can be reached at brian@finbox.io or at +1 (516) 778-6257.

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