Filed Under: ,
Tickers in this Article: WM
Analysts are expecting a drop in profit for Waste Management (NYSE:WM) when it reports its results for the third quarter on Tuesday, October 30, 2012. The company reported profit of 63 cents a year ago, but the current consensus estimate anticipates earnings per share of 60 cents.

A business' earnings are the main determinant of its share price because earnings and the circumstances relating to them can indicate whether the business will be profitable and successful in the long run. SEE: Can Earnings Guidance Accurately Predict The Future?

What to Expect: Analysts are projecting earnings of 60 cents per share for Waste Management, 4.8% less than a year ago, when the company reported earnings of 63 cents per share.

Whereas the consensus estimate was 62 cents three months ago, it has since fallen. For the fiscal year, analysts are projecting earnings of $2.12 per share.

Waste Management's expected revenue of $3.5 billion for the quarter is below last year's reported figure of $3.52 billion by 0.6%. Waste Management is expected to report revenue of $13.7 billion for the fiscal year.

Company Performance: Waste Management has reported revenue increases for the past four quarters. It increased 3.3% to $3.46 billion in the second quarter. Prior to that, the figure rose 6.2% in the first quarter, 6.9% in the fourth quarter of the last fiscal year and 8.9% in the third quarter of the last fiscal year.

Compared to the industry average of 10.07, WM's P/E ratio of 16.3 is quite high. A company with a high P/E ratio will eventually have to live up to the high rating by substantially increasing its earnings, or the price will need to drop. One of the most important estimates of stock market valuation is the price/earnings ratio (P/E ratio). From the investor's perspective, a stock with a lower ratio is relatively cheaper than a stock with a higher ratio. SEE: How To Use The P/E Ratio And PEG To Tell The Future Of A Stock

Since July 27, 2012, the stock price has dipped 5.8% to $32.16 from $34.15. Currently, Waste Management's stock is on a downward trend. The share price has fallen 82 cents since October 18, 2012.

The Competition: Waste Management is a provider of integrated waste services in North America. It provides collection, transfer, recycling, disposal and waste-to-energy services. Most analysts (six of nine) give Waste Management a hold rating. They are slightly more optimistic about the stock recently, as the number of buy ratings has risen slightly over the past three months.

The company's closest competitor in the waste management services industry is Republic Services (RSG). Analysts are less optimistic about Waste Management than about Republic Services. Two out of eight analysts rate the latter a buy compared to zero of nine for the former.

comments powered by Disqus

Trading Center