Waste Management, Inc. (WM): Why Is This a Stable Alternative Energy Play?

Page 1 of 2

Waste Management, Inc. (NYSE:WM) is a provider of disposal, collection and recycling services in North America. Most investors are likely familiar with the company’s green bins and trash-collection services. However, investors may be less aware of the significant recycling and energy recovery businesses the company is involved with. The company has reported that it can produce over 550 megawatts of electricity, enough to power more than 440,000 homes, from its landfill natural-gas recovery program. This offsets the burning of over 2.2 million tons of coal per year.

Waste Management, Inc.

Waste Management, Inc. (NYSE:WM) produces more renewable energy in the United States than the entire solar industry, in combination with its waste-to-energy program. Thus, Waste Management may arguably be one of the most green companies in the market, and provides more stable and predictable performance than the volatile solar sector.

Waste Management, Inc. (NYSE:WM) is committed to expanding its recycling capabilities. The company acquired Greenstar, one of the country’s largest private recyclers, in January. Greenstar managed approximately 1.5 million tons of recycled material, providing Waste Management with an overall capacity to manage 15 million tons of recycled material annually. Recycling is an important aspect of the company’s business.

Waste Management, Inc. (NYSE:WM) has a market cap of $18.5 billion, and a P/E ratio of 22.7. First quarter 2013 revenue was slightly more than $3.3 billion versus $3.3 billion for the prior year quarter, representing an increase of 1.2%. Net income was $0.36 per diluted share, versus $0.37 per diluted share for the prior year quarter. Earnings were hurt by a drop in recycling commodity prices of around 12%, along with an increase in operating expenses of $43 million. Waste Management’s guidance is that 2013 adjusted earnings will increase between 4% and 6%. The company’s net income for the fiscal year 2012 was $13.6 billion.

Recent valuation

Overall, the stock has performed well and is up 19.8% year-to-date. The stock has a fairly low beta of 0.7, indicating that it trades with less volatility than the overall market. The company has an attractive dividend yield of 3.7%, and a dividend has been paid every quarter since at least 2009. Waste Management has a short float of 3.9% with 17.8 million shares being shorted as of the end of May.

Others in alternative energy

Waste Management, Inc. (NYSE:WM)’s main competitor is Republic Services, Inc. (NYSE:RSG). Republic takes away non-dangerous waste from houses and businesses, much like Waste Management. Its operating margins are quite similar, in the mid-teens, but Waste Management is superior at reinvesting capital with a significantly higher ROE at 13%.

Republic Services, Inc. (NYSE:RSG) has a market cap of $12.3 billion, along with net income of $5.5 billion for 2012. The company has a P/E ratio of 22.5, comparable to Waste Management, Inc. (NYSE:WM), and a lower dividend yield of 2.7%. Republic’s share price has performed well in the last year, rising 37.2%. The stock is currently trading at around $34.06. It has a slightly higher beta of 0.8 and low monthly volatility of 1.6%.

Page 1 of 2
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools In the World

50 Crazy Facts About Japan You Won’t Believe

Top 10 Least Expensive Hybrid Cars to Save the Planet With

The 10 Biggest ‘Gate’ Controversies in History

The 10 States with the Highest Nursing Shortages Leaving Their Hospitals Depleted

The 10 Best Value Investment Blogs that Every Investor Must Read

The 6 Cheapest Boarding Schools in Europe 2015

The 5 Most Expensive Cars To Insure in the World

The 10 Most Common Genetically Modified Foods

10 Self-Made Billionaires Who Came From Nothing

The 10 Most Expensive Cities to Live in North America

The 13 Most Expensive Headphones in the World to Represent

The Top 20 Wealthiest Soccer Teams in 2014

4 BuzzWorthy Cannabis Stocks And Some Smoking Derivative Plays

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

Top 6 Cities For The Ultra Rich to Live in Comfort

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!