Canada Markets closed
  • S&P/TSX

    20,928.10
    +108.16 (+0.52%)
     
  • S&P 500

    4,471.37
    +33.11 (+0.75%)
     
  • DOW

    35,294.76
    +382.20 (+1.09%)
     
  • CAD/USD

    0.8086
    +0.0001 (+0.0065%)
     
  • BTC-CAD

    75,913.68
    +23.26 (+0.03%)
     
  • CMC Crypto 200

    1,464.06
    +57.32 (+4.07%)
     
  • GOLD FUTURES

    1,768.10
    -29.80 (-1.66%)
     
  • RUSSELL 2000

    2,265.65
    -8.52 (-0.37%)
     
  • 10-Yr Bond

    1.5760
    +0.0570 (+3.75%)
     
  • VOLATILITY

    16.30
    -0.56 (-3.32%)
     
  • FTSE

    7,234.03
    +26.32 (+0.37%)
     
  • NIKKEI 225

    29,068.63
    +517.70 (+1.81%)
     
  • CAD/EUR

    0.6966
    -0.0001 (-0.01%)
     

CLH or WM: Which Waste Removal Stock Should You Retain Now?

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

The coronavirus outbreak has necessitated the proper disposal of waste. In fact, waste management companies are at an advantage in situations such as the ongoing pandemic as healthcare officials have to dispose of used masks, gloves, suits, syringes and other medical equipment properly, in order to curb the spread of infection. Government initiatives, as well as stringent rules and regulations to advance sustainable waste management mechanisms and put a check on illegal dumping, are also expected to aid the industry.

Growing adoption of recycling techniques, and development of technologies and advanced waste collection solutions are key trends within the industry. Recycling remains a major growth area, with most industry players undertaking municipal solid waste- and non-hazardous industrial waste-recycling measures. Rising environmental concerns, rapid industrialization, increase in population and an expected increase in non-hazardous waste as a result of rapid economic growth should enhance business opportunities for waste management companies.

Given this encouraging backdrop, it is not a bad idea to undertake a comparative analysis of two waste removal services industry stocks — Clean Harbors, Inc. CLH and Waste Management, Inc. WM. Both stocks are part of the broader Zacks Business Services sector (one of the 16 Zacks sectors). While market capitalization of Clean Harbors is $5.29 billion, that of Waste Management is $64.29 billion.

As both stocks carry a Zacks Rank #3 (Hold), we are using certain other parameters to give investors a better insight. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

Clean Harbors clearly scores over Waste Management in terms of price performance. So far this year, shares of Clean Harbors have gained 30.1%, outperforming the 29.5% rally of Waste Management and 10.8% growth of the industry.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Earnings Surprise History

Earnings surprise history helps investors get an idea of the company’s performance in previous quarters.

Both Clean Harbors' and Waste Management's earnings surpassed the Zacks Consensus Estimate in each of the previous four quarters. However, Clean Harbors delivered a higher average earnings surprise of 101.5% compared with Waste Management’s 6.3%.

Earnings Estimate Revisions

The direction of estimate revisions serves as an important pointer when it comes to the price of a stock.

Over the past 90 days, the Zacks Consensus Estimate for Clean Harbors’ current-quarter earnings has improved 34.2% while the same for Waste Management has grown 0.8%.

For 2021, Clean Harbors’ earnings estimates have improved 28.5% compared with an increase of 2.7% for Waste Management. For 2022, Clean Harbors’ earnings estimates have surged 7.2% compared with an increase of 3% for Waste Management.

Based on quarterly and yearly earnings estimate revisions in the past 90 days, Clean Harbors is better placed than Waste Management.

Valuation

EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization) ratio is the commonly used metric for valuing waste removal services stocks because of their high debt levels.

We observe that Clean Harbors and Waste Management have EV/EBITDA ratios of 10.4 and 15.3, respectively, compared with the industry’s figure of 11.3. Clean Harbors has an edge over Waste Management with a lower EV/EBITDA value.

Net Margin

Net profit margin helps investors evaluate a company’s business model in terms of pricing policy, cost structure and operating efficiency, and shows how good it is at converting revenues into profits. Hence, a strong net profit margin is preferred by all classes of investors.

With a TTM net margin of 9.7%, Waste Management not only compares favorably with the industry’s figure of 7.4%, but also has a lead over Clean Harbors’ 5.5%.

Bottom Line

Our comparative analysis shows that Clean Harbors scores over Waste Management in terms of price performance, earnings estimate revisions and earnings surprise history. However, Waste Management enjoys an advantage in terms of net margin.

Despite a faster share price rally so far this year, Clean Harbors has a lower valuation compared with Waste Management.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Waste Management, Inc. (WM) : Free Stock Analysis Report

Clean Harbors, Inc. (CLH) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting